Easy Rate Policy Spurs Inequality, Ex-India Central Banker Says
- Acharya says monetary policy is favoring large companies
- Easy policy risks asset price bubbles and helps speculators
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India’s easy monetary policy response to the pandemic risks stoking income inequalities and asset price bubbles, while more fiscal support is needed, particularly for the most-vulnerable, according to a former central banker.
Viral Acharya, a hawkish central banker during his term as deputy governor of the Reserve Bank of India from 2017 to 2019, sees record-low interest rates mainly benefiting large companies and the formal economy. But the government should focus on programs such as direct benefit transfers that will help address inequalities, Acharya said in a presentation, titled “Covid Lessons from India and Other Emerging Markets,” which he made available to Bloomberg News.