Capital flows could impact inflation. Decisions by other central banks could also cause inflation, especially in a globalising world. In a crisis such as this, inflation could also come through the trade channel. Also, India is largely an agricultural economy, even though agriculture now accounts for less than 20% of GDP.
So, our agriculture prices are vulnerable to monsoon and adverse weather conditions, and beyond the pale of monetary policy action. Because of this, inflation targeting is neither possible nor advisable for the Reserve Bank. CB: You've said that you're unconcerned that there is a threat of serious deflation despite wholesale prices being in negative territory.