You cannot be a chamcha and a man at the same time.

We are constantly being told by politicians and tame economists that all our problems are due to high interest rates and it is the Reserve Bank which is holding up growth by refusing to lower interest rates by large chunks. In fact, all the present problems of uncontrolled inflation, a sinking rupee and falling investment is because the RBI did not raise rates fast enough and high enough to really have any effect on inflation. At all times the RBI seemed to be trying to please the Congress by keeping rates too low while praying for some divine miracle to lower inflation. Interest rates were down to 4.75% in April 2009 in a blatant attempt to influence elections in May in favor of the Congress. It worked and the Congress increased its seats in parliament. But at the cost of the country. Uncontrolled inflation has resulted in the rupee falling to below 60 to the dollar and the RBI has been forced to tighten short term lending rates in an effort to reduce money supply and the rupee falling further. The Governor, Subbarao said," Rates will come down in the future, but not till such ( time ) as currency volatility is there. " Livemint, 31 July. He said that the RBI is unable to reduce rates as the country is " currently caught in a classic impossible trinity trilemma," and forced to " forfeit some monetary policy discretion to address external sector concerns." Trilemma refers to managing free capital movement, a stable exchange rate and an independent monetary policy. What he is saying is that he is not free to decide monetary policy and that the rupee could fall further if the Federal Reserve decides to taper its bond buying program. He said that he cannot say how temporary the monetary tightening is going to be because " we were not in a position to tell how temporary it is. It is state contingent and data dependent." That is patently not true. All the data was pointing to a rising inflation but he held on, trying to please the Congress until forced to take action. There have been civil servants, such as TN Seshan and Vinod Rai, who stood up to politicians and have gone into history books but Mr Subbarao will be remembered by the people as a Congress lackey while the Congress is so displeased with him that they have refused to renew his contract. Thus he has pleased neither. A lesson for all civil servants - you can either be a chamcha or you can be a man. You cannot be both.