The Reserve bank of India on 17 October in a 280 page report said that the fight against inflation will be dogged and prolonged as the monetary policy operates with long and variable lags.
This was after the country's inflation fell to an 18-month low to 10.7 per cent in September and it released minutes of the monetary policy committee meeting held last month. The minutes showed that the committee members were divided on what actions need to be taken in the future to deal with the Inflation.
The central banking regulator report authored by 28 RBI staff including deputy governor Michael Patra said, "The fight against inflation will be dogged and prolonged, given the long and variable lags with which monetary policy operates, and fraught with uncertainties."
The report said that the headline inflation is set to ease from its last month's high and the easing of inflation is likely to be driven by food and beverages. Food and beverages have undergone multiple shocks in the first half of this year.
The global slowdown was triggered by aggressive and synchronised monetary tightening that has weakened global economic prospects as investors took fright and took risky assets.
The report also said that if the RBI moves succeed then it will increase India's prospects as one of the fastest-growing economies in the World. The report also quoted International Monetary Fund's (IMF) MD, Kristalina Georgieva saying, "India deserves to be called a bright spot on this otherwise dark horizon."
The RBI has indicated that it will soon be writing to the government about its failure to meet the inflation target after a meeting of the MPC. In the letter, RBI is also expected to announce its plans for reducing inflation and getting the economy back on track.
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