The Mid-Year Review of the economy of the Government tabled in Parliament on Friday by Union Finance Minister Arun Jaitley says Reserve Bank’s monetary policy lost its credibility between 2007 and 2013.
“For nearly six years (2007 third quarter to 2013 third quarter), India lost monetary policy credibility, reflected in the fact that real policy interest rates were consistently negative at a time when inflation was persistently in the double digit territory,” the Review said without naming the Reserve Bank. Since late 2013, however, this has been reversed, said the review prepared by Chief Economic Advisor Arvind Subramanian. The 6-year period that the Review criticised covers tenures of two former Governors of the Reserve Bank-- Dr. Y V Reddy and Dr. D Subbarao. Incumbent Governor Raghuram Rajan joined office in September 2013.