Would have liked to see RBI-staff MPC members also dissent sometimes'

ASHIMA GOYAL, external member, Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC), who voted for rate cut in both June and August review meetings, told Manojit Saha in an email interview that she does not see any broad-based rise in core inflation. The August meeting was the last one for external members who have fixed four-year tenure. Edited excerpts:

In the MPC minutes, you have said, citing the US Federal Reserve: "Since monetary policy acts with a lag, they can't afford to wait until they reach their inflation target before cutting." In the Indian context, do you think a majority of the MPC members want to wait till inflation comes around the target before reducing the policy repo rate, which could be counterproductive?

They want to be confident it is firmly aligned to the target. The RBI is one of the pillars of the economy and we have to thank it for our relative macroeconomic stability. But since I joined the Technical Advisory Committee in 2011, I have seen the staff fear old problems will recur. Even if inflation is low, they worry it may rise again. But trend inflation is lower in India and commodity price shocks are less persistent. If change is not recognised and space available to cut is not used, the growth sacrifice is higher than it needs to be.

What is the extent of the growth sacrifice, according to your estimate, if the MPC waits till the end of the financial year for reducing the policy rate?