Life at MPC has been comfortable for some time, with members debating whether to address growth or inflation. But it just got tougher with murmurs about stability getting louder. This institution’s mandate may not cover financial and economic stability, but its actions impact them. And RBI that sits on top of MPC will take credit for good times, or carry the blame for messing up, depending on the outcome.
As MPC meets later this week, for the first time in more than a decade, the economy is caught in a perfect storm — rupee at historic lows, soaring subsidies, spectre of fiscal deficit overshooting, acceleration in capital outflows and higher prices. While some of them may be self-inflicted, others are given.
