Topic Of The Day:-“Enabling Job Creation“
There is a certain populism inherent in privileging inflation control to justify extraordinarily high interest rates. While it would be bad economics to tolerate high inflation, the absence of inflation by itself only benefits those in employment, it does not assure jobs to the unemployed. Thus a monetary policy that ignores the impact of its actions on unemployment is not credible. Interestingly, the government and the RBI have always been on the same page as far as inflation targeting is concerned. The populist message that inflation erodes the income of the poor conceals the possibility that in the implementation such a policy could hold back job creation by restricting investment. The rising current account deficit, the slow growth of employment and the disappointing performance of manufacturing, the sector most closely affected by high interest rates, should prompt us to review how monetary policy is conducted in India. In the past, the RBI had a ‘multiple indicators approach’ which paid attention to inflation, growth and the current account. This may not have borne the precision conveyed by ‘inflation targeting’ but it did answer to Keynes’s dictum, “It is better to be vaguely right than to be precisely wrong.”
MEANINGS AND WORDS
1) erodes
Meaning : (of wind, water, or other natural agents) gradually wear away (soil, rock, or land)(v).
Synonyms : wears
Antonyms : fixes
Example : “the cliffs on this coast have been eroded by the sea”
2) conceals
Meaning : not allow to be seen; hide(v).
Tamil Meaning : மறைக்கவோ
Synonyms : disguises
Antonyms : acquaints
Example :“a line of sand dunes concealed the distant sea”
