Briefly put, from the perspective of the “supply side”, one can view economic policy (and reforms) in the context of three broad buckets—tax and spending policy, monetary policy, and regulatory policy. On monetary policy, the monetary policy framework agreement, which instantiates inflation targeting as the official policy regime under the aegis of a monetary policy committee headed by governor Urjit Patel, now brings India up to global standards. Whether one likes it or not, in a world of flexible exchange rates, inflation targeting remains the gold standard (if you will pardon the mischievous analogy). Frenkel, in particular, was most appreciative of India adopting inflation targeting, and commended the Indian government’s decision to do this. If we succeed, India, like Mundell himself will then be able to say that we did it “our way”.

Source: Mint July 16, 2017 18:00 UTC