Do professors write articles out of self interest?

"Rules are reversing the relationship between monetary and fiscal policies, from monetary accommodation of fiscal deficits (FDs) to independence of central banks with restraints on FDs," wrote Prof A Goyal who is a member of the Prime Minister's Economic Advisory Council. This is because of effect of monetary policy on debt, and macroeconomic stability and lower FDs because of inflows of foreign funds. The threat of outflows of these funds increase the independence of the Governor of the RBI. The real reason why central banks have become independent is because of "historical experience of negative effects of fiscal dominance with passive monetary accommodation". An inflation target of 2% was adopted by developed countries in 1990. So, what is Prof Goyal's gripe? Tight monetary policy reduced economic growth. "Since 2011 Indian growth has averaged 2% lower compared to the previous period -- implying an irreversible loss." This was her accusation against the previous Governor of RBI, Raghuram Rajan. Retail inflation is due mainly to food prices and that depends on supply. Monetary policy is useless if supply falls. She recommends an asymmetric inflation band: "+3 and -1 around 4". Which means she thinks that a retail inflation level of 7% is tolerable. The Congress party was wiped out in 2014 because of very high retail inflation. The previous Governor of RBI was reducing interest rate in 2008-09 even while retail inflation was inching up to 8% and was too hesitant in tightening monetary policy, until Rajan came along. The key to reducing inflation seems very easy -- just increase food production. Trouble is, bumper crops result in a crash in food prices leading to severe losses for farmers, as happened last year. BJP majority in the assembly in Gujarat, Modi's home state, was reduced in last year's election because of anger among farmers, wrote Prof H Upadhyaya. With general elections next year Modi is not taking any chances. He has promised to increase Minimum Support Price to 1.5 times the cost of production which puts a floor under food prices. A survey by the government's National Sample Survey Office showed that the poor spend over half their earnings on food so any rise in food prices hits them hard. Monetary policy has very little to do with economic growth, wrote Prof R Chinchwadkar, citing a recent paper. Zero interest rate, and even negative interest rates, have not been effective in raising growth or inflation. Perhaps Modi could learn from Prof Varoufakis, who is a self-declared communist, and put an end to handouts policies of the Congress. He would not have to resort to tax terrorism to balance his books. Prof Goyal should be advising him instead of telling the RBI what to do. We trust the RBI over Parliament any day.