Though I have repeatedly asked for clarification of the RBI memo on fiscal deficits, the RBI has chosen not to respond. Just to reiterate, in my note I have stated that important results pertaining to the RBI policy on fiscal deficits causing inflation cannot be reproduced. What is the empirical evidence for the argument that an expansion of fiscal deficits leads to an increase in CPI inflation? All we are saying is “give accountability a chance”. The only goal of the jawabdehi proposal is to bring about accountability, not rate cuts or rate hikes.

Source: Indian Express December 01, 2017 18:33 UTC