Another simpler, though not very satisfactory, way of deriving it is from the Taylor rule estimate itself. The empirical estimate from the two alternatives of Taylor rule estimated by us suggests it to be in the range of 0.5–0.9 per cent covering a longer period from 2000–01:Q1 to 2012–13:Q3 which encompassed the recent bout of high inflation.
The implicitly derived number from the high growth and low inflation phase of 2003–08 works out to 1.1 per cent per annum (Table 1). For the purpose of this exercise we have assumed it to be 1 per cent.