"Most economies have to contend with an uncertain future; here, in India,
we are having to contend with an uncertain past as well. This uncertainty poses
a challenge for all economic policy, particularly for monetary policy," said
D Subbarao, Governor, Reserve Bank of India. In support of his assertion,
the Governor, citing the specific example of current wholesale price index that
is used to measure inflation, said that the index gives an indication that
deflation has set in, while the truth is
contrary— consumer prices are continuing to
soar. This fact is further vindicated by the country's four consumer price
indices hovering in the range of 9-10%.
Obviously, such contradictions in vital data are sure to make
Central Bank's job more complicated. He also lamented: "Globally, trends in
employment are one of the most important inputs for setting monetary policy
response. Unfortunately, we do not have any reliable nationwide statistics
on employment." He also felt that though data on factory as well as farm
sector employment is available, it is useless for monetary policy purpose, for it
is available at poor frequency, that too, with a long lag.
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