Dr. Reddy has had to deal with two episodes of inflation, one demand driven and the other supply driven. He has also had to deal with a flood of capital flows. I have had a baptism by fire, taking over at a time of crisis, where I've had to act quickly. It has been a steep learning curve.
CB: Do you feel that the Reserve Bank of India's relative scepticism towards inflation targeting has been vindicated by recent events? DS: Yes, to a large extent. Because, in India, inflation is influenced by a number of factors besides excess demand in the context of easy liquidity. We're an import-dependent economy that is reliant on importing commodities. So, import prices can drive up inflation.