Skip to main content

SUGGESTION TO PMEAC CHAIRMAN DR C. RANGARAJAN


SUGGESTION TO PMEAC CHAIRMAN DR C. RANGARAJAN

To:               The Honorable Prime Minister Economic Advisory Council Chairman
Dr. C. Rangarajan.

From:           Athinarayanan Sanjeevraja

Date:            24.10.2011

RE:               Taming Inflation

Suggestion:    Tightening Fiscal Policy  

Good Morning Sir. I read your report which has been published in “THE HINDU” dated on October 21, 2011. You were talking about the rollback of the excise duty stimulus. I think you are heading into the opposite direction sir. We need more symmetric use of fiscal policy is now required to temper growth and inflation. Because inflation continues to remain elevated despite RBI has increased interest rates 12 times since March 2010. Monetary policy tightening may have been a stronger lever the taming inflation in the past but not today. I am still insisting that monetary policy no longer works to taming inflation. The answer, therefore, is fiscal tightening. Taxes need to go up and spending cut. This would curtail demand and ultimately price pressure. A hike in income tax rates would weigh on the purchasing power of households and rein in inflation expectations. Our goals maintain ambitious program to build out infrastructure. In addition, governments will continue to run sizeable deficits in the coming year. Of course, this may well be justified. Moreover, you help to raise the productive potential of local economies and drive down excessive saving rates among households.

Fiscal tightening, of course, politically unpalatable but aggressive fiscal tightening would offer a chance to fiscally achieves meaningful consolidation of the public money. Moreover, the world would hardly benefit if India’s inflation continues to remain elevated. Tempering price pressures in India helps western consumers too in struggling with high unemployment and considerable debt.
Thank you very much for your kind attention Sir. 


Sincerely,

Athinarayanan Sanjeevraja.

Follow me on Twitter: @ Athinarayanan Advisory Authority 

Comments

Post a Comment

Popular posts from this blog

SUGGESTION TO THE FEDERAL CONSTITUTIONAL COURT, GERMANY

SUGGESTION TO THE FEDERAL CONSTITUTIONAL COURT, GERMANY  To:               The Right Honorable Federal Constitutional Court Vice President  From:           Athinarayanan Sanjeevraja Date:            05.10.2011 RE:               Issuance of Eurobond   Suggestion:    Approval of Issuing Eurobond Good Morning Prof. Dr. Kirchhof. I am writing to express that Federal constitutional court explicitly rules out Eurobonds a few weeks ago. In addition you had warned, Ms. Angela Merkel, a Chancellor of the Federal Republic of Germany, never again to propose Eurobond. This is certainly not good news for me as well as Europe. German brothers and sisters in the Euroland must help in this difficult moment with iss...
Post a Comment
Read more

SUGGESTION TO THE PRIME MINISTER OF JAPAN YOSHIHIKO NODA

SUGGESTION TO THE PRIME MINISTER OF JAPAN YOSHIHIKO NODA To: The Right Honorable Japanese Prime Minister Yoshihiko Noda From: Athinarayanan Sanjeevraja Date: 30.09.2011 RE: Japan Energy Policy Suggestion: Changing Industrial Policy Good Morning Prime Minister. BBC World broadcasted your speech regarding alternate energy sources. I agree with your approach to reduce nuclear power in the medium term because having the nuclear reactors in an earthquake prone zone is not safe for the environment or the communities that live near them. Japan is struck in a difficult situation concerning energy. If you want to eventually move away from the nuclear energy, you’ll have to invest more alternative energy sources. If you can’t invest, then it may have to say with a nuclear power for a while. You need make the right decision because source of energy is dwindling. You have one more option which is Japanese people depend on nuclear power with only 1% but 9% including hydroe...
Post a Comment
Read more

SUGGESTION TO THE BANK OF ENGLAND GOVERNOR SIR MERVYN KING

SUGGESTION TO THE BANK OF ENGLAND GOVERNOR SIR MERVYN KING To:               The Right Honorable Bank of England Governor Sir Mervyn King   From:           Athinarayanan Sanjeevraja Date:            October 17, 2011 RE:               QE Suggestion:    Identify and correct the fundamental factors that are behind low economic growth.  Good Morning Sir. The Bank of England has decided to undertake more QE. I agreed that during the financial crisis of 2007-2008 monetary policy was effective in re-establishing liquidity in the main developed economies especially US, UK and Europe. But current economic conditions in developed economies reveal problems whose solutions are far beyond the scope of monetary an...
Post a Comment
Read more