Sunday, January 6, 2013

Central Banks cannot fix problems of Economy on their own - RBI Governor


It should rather read "Central Banks cannot fix politician created problems of Economy" 
Mr. Subbarao rightly pointed out "Governments need to act from the fiscal side, and monetary and fiscal policies have to act in harmony."

The economy is under tremendous pressure of financial decisions made for political gains an outcome of coalition politics. Every time a controversial bills is to be passed in the parliament it is not without behind the back deal from ally parties on waiver of loans, grant of additional funds allocation to their states, money for distributing - free television sets, free computers, free laptops, free mobile phone with free talk time balance, I am not sure where this unplanned funds are going to be generated. Where is the MONEY going to come from?

I do not accept the Governors contention that RBI be given more autonomy and agree with Mr. Joseph Stiglitz two times Nobel laureate that RBI has done a better job with restricted freedom compared to Fed and ECB.  

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