Why not link policy rate to retail inflation, by law?

Against a usual chorus of demands for lower interest rate, the Monetary Policy Committee at the Reserve Bank of India kept policy rate unchanged at 6%, while lowering outlook for growth of real Gross Value Added, or GVA, from 7.3% to 6.7%. The RBI also predicted retail inflation rising to 4.2-4.6%. To the frustration of politicians inflation forecast of the RBI seems to err on the higher side so that policy rates are not reduced as they should be. In the second volume of the Economic Survey, the Chief Economic Adviser "pointed out that the RBI got its inflation projections wrong by more than 100 basis points for six out of the last 14 quarters". "The RBI's forecast was within 50 basis points of the outcome in another four quarters and within 25 basis points in one quarter." Not good. Even when retail inflation was in double digits people were demanding low interest rates. Previous Governor of the RBI, D Subbarao confessed to being behind the curve in raising rates to control inflation. S Ghosh wrote an angry criticism of the RBI's decision. "In the past few years whenever RBI has cut rates, its hands were forced by circumstances -- it was never out of choice but due to an absence of it." He admits that a lower rate will not tempt any business from borrowing Rs 30 billion to set up a new factory but, "The irrefutable truth is that all businesses which are displaying signs of growth -- such as two-wheelers, automobiles, regular mortgages and and affordable housing -- are all sensitive to interest rates." It is surprising that Ghosh is unaware of the efforts by politicians to reduce the number of private vehicles. At 10 million, Delhi has the largest number of registered private vehicles in India, of which over 3 million are cars and over 6 million are two-wheelers. In an effort to reduce private ownership of vehicles the government is thinking of levying charges for parking outside own residence. Cars are blamed for pollution, because blaming so-called rich people gets votes, when even experts cannot agree on what is to blame. Last year the Delhi government banned cars with odd and even numbers on alternate days. As for affordable housing the government is already providing huge subsidy on interest on loans. In its statement the RBI warned against increasing fiscal spending so maybe keeping rate high is its signal against irresponsible spending. The government can easily pass a law to set the real interest rate, say at 200 basis points. and policy rate would be adjusted every month based on the latest retail inflation figure. So if inflation is declared at 4.4% the policy rate will be 6.4%, rounded off to 6%. That will eliminate the silly debate every 2 months. But then it will be the responsibility of politicians to keep inflation rate as low as possible so that interest rate can be low as well. Politicians do not like to be responsible. Better to blame the RBI.