ECONOMIC LEGISLATION

1. Monetary policy cannot do anything about inflation

because food inflation is not under monetary policy
control.
2. In general, India’s inflation problems are deemed to
arise from supply constraints, so there is no need for the
central bank to tighten policy at all.
3. India’s fiscal deficit does not matter because the Indian
government borrows from Indians.
4. Indian banks do not have to worry about non-
performing assets because they have more than 20% in
government securities.
ECONOMIC LEGISLATION
5. India should have lower interest rates all the time because it
would boost investment and alleviate supply constraints.
6. Indian real estate prices can keep rising and will never come
down because India has demand all the time. Considerations like
affordability ratios do not apply to India and because property
prices should always be going higher, do not raise interest rates.
7. In India, higher interest rates will mean wider fiscal deficit
because the government’s interest rate burden would rise,
because the government will never reduce its market borrowing.
Therefore, do not raise interest rates.
8. India can have a combination of lower interest rates, high
inflation and cheap currency because India is unique.
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10. Savings rates stagnation does not matter for India’s growth because
India is India. Therefore, there is no need to raise interest rates.
11. India can simultaneously engage in loose monetary and fiscal policy
and the Indian currency would remain unaffected. Foreign direct
investment will keep pouring in because the world has no option but
to invest in India. Therefore, no need to raise interest rates.
12. Notwithstanding anything said above, we also believe that India is a
middle-income country and it is the world’s fastest growing large
economy.
13. We are Indians and we are different and hence we can
simultaneously believe in all of these without any fear of contradiction
or consistency of logic.