This is a strong piece by Prof Pulapre Balaksrishnan who once worked at Indian central bank. Now he teaches at Ashoka University.
He says inflation targeting has hardly served the common man. It is more in the interest of the bond market which likes such frameworks. RBI has been captured by the same vested interests it has avoided all this while:
This was really interesting to read.
How a train was robbed which was carrying RBI cash from Salem to Chennai. Railways/Police etc are clueless on how this happened.
This blog had earlier argued that firstly having a monetary policy committee hardly changes anything in central banking. So we in India should not be much excited about the same. MPC is one of those several pre-crisis fads which like all fads has been found wanting. Eventually central banks do what the boss says and it remains at that. MPC just makes the whole process fancier with few priests trying to figure the mantra and then eventually agreeing to what the head priest says. We keep saying results matter but have failed to see that MPCs have hardly changed anything much other than becoming an additional place for recruitment for economists.
Second, as we will copy whatever happens elsewhere so MPC has to be floated. So what should be done? Well atleast try and make it more regional representative. Instead of just having MPC members with similar education backgrounds and based in US/Delhi/Mumbai, we should get members which represent different regions. This will atleast get diverse views from different parts of the country. Monetary conditions differ widely across and having regular research, feedback and action is essential. But it is all missing. We talk so much of Federalism but do we have any idea about what is happening at regional level/state level economies? Having all states on board is obviously difficult but experts from different regions can be surely done.
However, it is unlikely this will happen. Our obsession is only to talk about economics which no one understands especially when it comes to monetary economics. One person reacted to the post saying won’t this politicise matters. Well, isn’t it highly politicised already? We will only learn more about different regions which is far richer than the usual noise about growth-inflation trade-off.
Given this, came across this post in Brookings which goes even further. It says regional Feds are not ethnically and gender diverse!
https://www.intelligenteconomist.com/economics-blogs/
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