India is simultaneously confronting an unprecedented hit to growth, a pandemic-induced adverse supply-shock that has kept inflation much above target, an unrelenting flood of capital inflows, and a trade-weighted exchange rate that still appears expensive.
With more objectives to target than instruments at hand, how can policymakers navigate this ‘quadrilemma’?
Sajjid Chinoy details the RBI’s policy options, trade-offs, and constraints.
