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. Taxe
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