Monetary policy announced by the RBI is always determined in tune with the broad guidelines given by the Govt of India which owns the bank and,therefore, can be rightly said getting influenced always by the former although,for name's sake RBI is an autonomous institution with all functional freedom.Given total freedom to deal with the situation with adoption of its own strategy,RBI would have definitely been able to control the inflation if not totally brought down so soon.Dr Reddy precisely appears to be feeling touchy about the helplessness of the country's Central Bank which he steered till yesterday.As he said, tighter monetary policy certainly would have helped the economy to bail out of the inflation,but tighter monetary policy cannot be to the liking of the ruling govt-especially in the context of the ensuing elections as it affects big industrialists,business tycoons etc who are chief fund givers to the political parties.By what Reddy has said and in view of the factors that continue to accelerate rise of fiscal deficit & trade deficit,there appear to be no signs of any significant appreciation in the rupee value.However enthusiastic a governor may be personally to do,ultimately it is the govt's plans & policies that influence the efficacy & effectiveness of all the decisions taken by the RBI.In the circumstances,Dr Subba Rao who took over the reigns of RBI appears having a very tough time to start with itself-particularly in combating the spiraling inflation.
