Given the economic illiteracy in India it is often impossible to craft good economic policy. People react with simple-minded hysteria to what is routine economic policy in the rest of the world.
Gokharn has charted out the only way that RBI can rein in inflation in the SR. He omits the RBIs desire to establish its credentials as inflation-hawks and thereby lower future inflationary expectations. By biting the bullet today and sharply raising interest rates the RBI makes it less likely that inflationary expectations and therefore actual inflation will reappear soon.
