Opposition moves today

Today, opposition parties are trying to coordinate demonstrations and a `Bharat Bandh' all across India. We've got empty roads of the kind not ordinarily seen:

The focus of these protests is: High inflation.



In many other countries, the political landscape has been one where politicians are relatively reckless about inflation, and the economists and central bankers are the ones preaching the virtues of low and stable inflation, asking for an independent central bank which does only one thing: deliver low and stable inflation.



We find the opposite configuration in India: the RBI (and the economists who run with RBI) criticise inflation targeting, and preach in favour of non-transparency and multiple objectives. I suppose this is a reflection upon the professional skills of economists and central bank staff in India. Most economists in India are brought up on traditional `development economics', which is a different skill set when compared with macroeconomics. Somehow, left wing economists (e.g. the EPW) have come to think that price stability is not that important, and leftist ideas have a remarkably big footprint in India, when compared with what we see in economics worldwide. Another dimension is the self-interest of RBI, which is likely to be pleased at being a central planning agency for Indian finance, and to not be held accountable for anything.



But all is not lost. We might not get central bank reform and inflation targeting through the traditional channel (the pushing by economists and central bankers). But we've got politicians who care deeply about inflation. Indian politicians are convinced that high inflation leads to losing elections. At some point, some team at the Ministry of Finance is going to get sick of the repeated inflation crises, and of having to take responsibility for delivering low and stable inflation.