The speed with which inflation goes up and down it will almost take more than a year to get it at the targeted level of 5-6%. The expectation arising out of this situation says that the RBI will take further steps to take inflation at the level, desired. It is, now, at 10%.
The government can help RBI if it facilitates supply of real goods and services (G&S).
One possible action could be the opening of the imports with a stronger Indian currency.
RBI's moves (decreased money-supply) could be supplemented by reducing import duties and a stronger rupee. After-all, it is the real availability of G&S that adds to real WELFARE and some times a stronger currency also works.
Government should increase tariff on inflow of funds and should decrease duties on imports of goods.
INDIA imports more than it exports and in international- trade deficit in Balance of Payment (BOP) is always disequilibrium. Therefore, the case is for a stronger currency…
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