India’s inflation-targeting regime may have brought discipline and credibility to monetary policy, but it now needs a serious rethink, starting with its blind spot on the exchange rate, says former Reserve Bank of India Governor Dr Duvvuri Subbarao.In this second part of our four-part series on “India 2047: Raising the Game for a Developed Future,” Subbarao argues that the Monetary Policy Committee cannot afford to ignore the external sector any longer. With the currency and inflation locked in a feedback loop, the MPC’s current narrow remit risks making policy decisions that are out of sync with global and domestic realities.
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