The Run between Economists and Management Experts: Rajan Scores

Abstract

The Reserve Bank of India (RBI) under the leadership of Raghuram Rajan takes a firm stand not to cut interest rates unless inflation cools to a new low of predetermined figure and for a sufficient long time. From October 2014 wholesale inflation has come down to the five-year low of 1.8 percent and the consumer inflation cols to a three year low of 5.5 percent. The run up to the fifth bi-monthly monetary policy announcement finds an intense debate between the supporters and the naysayers to the interest rate cut by the RBI. Mythili Bhusnurmath supports the rate cut. She advances her argument by quoting the words of Peter Drucker. This article examines her argument and finds that a management expert turned economist such as Rajan would not fall behind a pure economist in the run of fighting inflation and balancing India’s growth requirements. The article finds the research gaps so that further study can be carried out to establish the link between inflation-push growth and poverty alleviation of India. A study may also be done to find the link between inflation led growth and long-term economic development.