In Mint, Niranjan Rajadhyaksha argues that India should take a hard look at its existing macroeconomic playbook. Excerpts:
"A lot of attention is now focused on what the monetary policy committee (MPC) will do this week. The fiscal strategy will be revealed in the Union Budget due to be announced in early July. There seems to be more scope for monetary loosening rather than fiscal expansion right now—even while the problem of monetary policy transmission remains intact. Lending rates have not moved down in tandem with reductions in the policy rate...
India has been operating in a 2-4-6-8 macro framework in recent years. These are the respective targets or comfort zones for the current account deficit, retail inflation, the consolidated fiscal deficit on the Union and state governments, and the aspirational growth rate of the Indian economy. A well-functioning macro policy framework should be able to usually meet all four targets simultaneously, while satisfying the famous Tinbergen Rule that the number of policy targets should be equal to the number of policy instruments..."
Read the whole article here.