Not a sufficient condition because there is no empirical evidence to establish that the benefits of higher growth outweigh the costs of welfare loss associated with higher inflation. 55. Key to our collective national aspiration for sustained high economic growth is low and steady inflation.
It is only under such an environment of price stability that investors and consumers can make informed choices and contribute to growth. The responsibility of the Reserve Bank in this regard is to anchor inflation expectations and ensure price stability. Neither theory nor empirical evidence presents a credible case for acquiescing in a new normal for inflation in India.