As the growth momentum gathers pace, RBI is conscious of the growing need for a calibrated exit from the accommodative monetary policy stance, put in place as part of the strategy to manage the impact of the crisis. However, the policy dilemma facing India is qualitatively different from that faced by the advanced economies.
The pace of recovery of the Indian economy is widely expected to be faster than the developed nations. Further, unlike developed nations, India is confronted with a situation of high inflation, which currently appears to be more supply driven in contrast to economies which are demand starved.