Fuel is on fire, but RBI’s rate setting panel was on a worry path already

India’s central bank seemed less worried on inflation earlier this month when it signalled its intent to continue with an accommodative policy stance. But minutes of the meeting of its rate-setting committee show that members are already on the worry path over inflation.

Representatives of the Reserve Bank of India (RBI) flagged the stickiness in core inflation at the meeting and governor Shaktikanta Das has put the blame rightly on indirect taxes.

“Proactive supply side measures, particularly in enabling a calibrated unwinding of high indirect taxes on petrol and diesel—in a coordinated manner by the Centre and states—are critical to contain further build-up of cost pressures in the economy,” said Das, according to the minutes of the monetary policy committee (MPC) meeting.