Former RBI governor Raghuram Rajan on Wednesday said India needs to revise its response to price controls in view of the impasse in global supply chains due to the Russia-Ukraine war.
Rajan said that the objective of neither the government nor the RBI would be fulfilled if the war against inflation is lost. It is important for any central bank to respect the instructions from the government. The central bank of India has a directive and it has lived up to it, he said. During the pandemic, instead of increasing interest rates, preference was given to moderate inflation.
RBI has been directed to keep inflation at 4 per cent level, with a possibility of two per cent being more or less. He said, like any other central bank, we too have to solve new challenges when they arise. Otherwise, it will not be good for the economy.