Poonam Gupta: RBI's new status-quo Challenger

Copyright © HT Digital Streams Limit all rights reserved. Mening Puja Mehra 3 min Read 03 Apr 2025, 05:19 IST Poonam Gupta was appointed by the RBI as his new deputy governor. (World Bank) Summary with a track record at the World Bank and the IMF, Poonam Gupta’s view on inflation and exchange rates challenge the existing frameworks. North Block will look at her position so far that the government should reduce the debt GDP ratio faster than it did. Poonam Gupta’s appointment as Deputy Governor of the Reserve Bank of India (RBI) can test the status quo on some of the regulator’s policy and frameworks. This will be Gupta’s maiden policy role. She entered RBI after spending a significant part of her career at the World Bank and the International Monetary Fund (IMF). Her productive newspaper writing indicates that her view of policy matters is not always in line with that of RBI and the government. Gupta is categorically opposed to the RBI’s exchange rate policy, and, as recently as last month, argued that he abandoned the rupee more than the RBI allowed. If you persevere with such an approach, it can immediately find her in the BJP’s cross chairs. A stronger rupee and a muscular attitude in times of global economic noise remain the party’s preference. Calmer times are perhaps far. Trump’s reciprocal rates will come into effect this week. A global trade war is threatening. The tension can spread in financial markets worldwide. The Benchmark Equity Index Sensex and the Indian Rupee are already on an Achtbaan ride. Things are not going to be home. After completing ten years of implementation, the RBI’s inflation -oriented framework will be due for a review in 2026. The RBI and the government will turn off deliberations for which this year itself. Members of the RBI Monetary Policy Committee (MPC), after which Gupta is expected to join as a deputy governor in charge, has recently started a debate on what the inflation target, which is currently set at 4%. Gupta has long believed that 4% inflation is too low for India and that something like 5-5.5% would be better. Inflation in focus has long believed that 4% inflation is too low for India and that something like 5-5.5% would be better. She made the matter during a panel discussion presented at Columbia University in November 2022, which was moderated by trade economist Arind Panagariya, including Gupta her PhD. Hawkish Voices of the MPC, especially of its RBI members, at the time argued that the role of monetary policy was first inflation of 7% to the Tolerance Band (2-6%) and then aligned it with the 4% objective. The then Governor Shactikanta Das defended it, and the RBI even threw the RBI in the role of Ace Archer, Arjuna, of the Mahabharata in the hope that this kind of communication would arouse caution by the economy. The RBI was concerned that inflation expectations were about to expose, as businesses and households sharpened their belts when inflation eroded their purchasing power. But Gupta was one of those who saw a high inflation as short -lived, which the MPC could afford to see through, as it would relieve it within a ‘few months’ – on demand and maladjustments in foods resolved. ‘Vegetable prices hold India’s monetary policy hostage,’ is how she put it. Afterwards, the concerns of the MPC were ratified when voters reduced the BJP’s score to the majority mark in the Lok Sabha election last year, and the cost of living was dissatisfied. Government’s latest estimates show that real GDP growth in 2023-24 was 9.2%, the fastest in more than a decade, taking the wind from the public attacks on the RBI’s monetary policy record. Also read: Mint Quick Edit | Inflation: Finally in RBI’s control? Dovish Stance In February this year, Gupta wrote about the RBI monetary policy, asking for a Dovish attitude and a fresh look at the inflation target of 4% and the other details of the framework. It is not clear whether she sends out the view of New -Delhi. The government’s view is not yet known and may not have been formulated yet. In 2016, Prime Minister Narendra Modi and then Finance Minister Arun Jaitley established for the 4% goal, convinced that higher inflation would injure the poor. The RBI was more or less aimed at keeping inflation at 4% in the decades before the formal launch of the inflation target framework. Gupta reflects the consensus view when she asks for improvements in the prediction and transfer of monetary policy. A number of economists are caught on the wrong foot on inflation growth exchange partly because the government has not yet updated the CPI basket to reduce food items weights in accordance with the findings of the latest domestic consumption surveys. It is expected to be completed next year. It also did not help that RBI’s inflation and the GDP growth forecast were constantly out of the mark, which often looks like guesswork. North Block will see, among other things, Gupta at her position so far that the government has to reduce the debt GDP ratio faster than it did. Also read: Rupee has placed RBI between a rock and a hard place, all the business news, market news, news events and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #rbi Mint Specialies