“THERE IS NO INDICATION OF AN INVESTMENT SLOWDOWN YET”
Q&A : ARVIND VIRMANI
Siddharth Zarabi & Rituparna Bhuyan
Business Standard, New Delhi August 21, 2008
In the second and concluding part of an interview, Arvind Virmani, chief economic adviser, Ministry of Finance, tells Siddharth Zarabi and Rituparna Bhuyan that the monetary policy has to be directed more strongly towards tackling inflation. Excerpts:
Do you think there is a trade-off between growth and inflation?
Traditionally, the Indian political system does not tolerate inflation above a certain level. We have crossed that point. Therefore, monetary instruments have to be directed more strongly at the inflation issue.
Does that mean we accept whatever happens on the output side? The answer is both yes and no. No in the sense that we can use one more instrument, which was dormant in the past, and that is reforms.
We are moving towards a revised wholesale price index (WPI). What is your view?
Q&A : ARVIND VIRMANI
Siddharth Zarabi & Rituparna Bhuyan
Business Standard, New Delhi August 21, 2008
In the second and concluding part of an interview, Arvind Virmani, chief economic adviser, Ministry of Finance, tells Siddharth Zarabi and Rituparna Bhuyan that the monetary policy has to be directed more strongly towards tackling inflation. Excerpts:
Do you think there is a trade-off between growth and inflation?
Traditionally, the Indian political system does not tolerate inflation above a certain level. We have crossed that point. Therefore, monetary instruments have to be directed more strongly at the inflation issue.
Does that mean we accept whatever happens on the output side? The answer is both yes and no. No in the sense that we can use one more instrument, which was dormant in the past, and that is reforms.
We are moving towards a revised wholesale price index (WPI). What is your view?
Even more important than that is the consumer price index (CPI). We need an aggregate CPI for the very reasons that I told you. The gap between the United States’ CPI and the PPI (purchasing power index) is huge now. It may not be as large in India but I am sure there is a gap.
The only way we will be able to prove it is by looking at what we introduced in the previous economic survey — the private consumption price deflator. I expect that it will be much lower. My rough guess will be about 50 per cent higher than last year. It was close to 4 per cent last year, so it may be 6 or 7 per cent this year. The implication of what I am saying about the PPI is that please do not look only at the WPI when talking about inflation or forming expectations on inflation.
(...) [artículo aquí]
First Part: “This Inflation is Like 70s’ Oil Shock”, August 20, 2009
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