Monetary Policy

Central Bankers prime responsibility is to utilise the Monetary Policy to achieve Monetary stability over long periods under varying conditions. This as the author has indicated, predominantly relate to maintaining the Purchasing Power of a currency. But there are two other significant elements which need to be balanced;

- One the competitiveness of the export basket should not deteriorate and the other
- the main stay of the people be it industrial wages or the value of agriculture produce should be stable.

While some may tend to ignore the comparison of Gold to purchase power, as to be too elitist, the situation of the Indian farmer or the wages of our semi skilled worker will throw a definitive view. It will be too simplistic to assume that all these can be achieved only by the Monetary policy. But monetary policy can substantially support these, as in the case of USA where the Asian economies surpluses are funding the subsidy of the USA farmers(Budgetary deficit). Not many states will be able to practise this. The decision of the US central bankers to believe in their systems and make their currency fully convertible in an era of where everything was closed has brought them this reward. It is always the first mover who will have the advantage as it is evident here.

Given this background, it is necessary for the central banker to come up with innovative mechanisms and steps, structured to capitalise on the individual country's strength. We have today put in place sound controls which can be relied up on. So it is time to take bold steps which are unique to our country's strengths. Two starking uniqueness are evident

One - Our huge retail stock of gold(should say hoard) No other country has so many of their citizens hoarding gold. This immense asset is not put to use. This has to be done.

Second - Our Youth. We are one of the two countries who will have the largest number of youth in the next decade, whose services will be in dire need amongst the so called developed nations as well. We need to formulate policies, to retain this youth in our country to levergae thier earnings.

India is poised to move in to another era and path breaking efforts are needed to take to Her to the rightful place She deserves.