Serving the government is not the same as serving the nation.

 "With the economic recovery better and inflation higher than expected in the US, the Federal Reserve has signalled it might taper its bond purchases. The International Monetary Fund (IMF) in its World Economic Outlook of April 2021 has raised the possibility of capital outflows from emerging markets and developing economies (EMDEs) should the financial cycle turn, spelling instability ahead of them," wrote Prof Alok Sheel. Robert Mundell postulated that policymakers can choose any two, but not all three, macroeconomic objectives -- foreign capital mobility, fixed exchange rates and inflation management", wrote Prof Amol Agrawal. Meaning that, if foreign capital begins to flow out of India the rupee will drop, increasing prices of imports, including oil, resulting in inflation shooting up. "The government will continue with the target of maintaining retail inflation at 4% (+/- 2%) for the next five financial years," Business Today (BT). However, "A report by SBI Research has claimed that the Consumer Prime Index (CPI) computed inflation since December last year is higher than the figures reported by the government's Central Statistical Organisation (CSO)," BT. "RBI managed this trinity by increasing liquidity via multiple programmes keeping bond yields low. This was at the cost of almost ignoring the inflation target, which remained above the upper target range of 6% from April to November 2020," Agrawal. Not just that, "Last week, the RBI approved a transfer of Rs 99,122 crore (Rs 991.22 billion) as surplus to the central government for the accounting period for nine months ended March 31, 2021. The RBI has changed its accounting year to April-March from the earlier July-June," India Today. "Stretched to four quarters, that would amount to more than twice the payout it made the year earlier, ended June 2020," Mint. "The irony here is the bonanza turned over by RBI just before covid struck. In August 2019, it gave the Centre Rs 1.76 trillion for 2018-19, up from Rs 50,000 crore (Rs 500 billion) the previous year." "Viral Acharya, a deputy governor who left soon after warned of 'the wrath of financial markets' over a monetary authority that lacked liberty." "The Union government is staring at a second year of revenue shortfalls as the resurgence of the coronavirus and the subsequent localised lockdowns deliver a crushing blow to economic activity," Hindustan Times (HT). Government debt is set to rise to over 80% of GDP due to increased borrowing this year to make up for a shortfall in tax collections, Business Insider. "The Indian government also has the option to flood the economy with more rupees to make its payments. If the government has too much debt and it fulfills its debt by printing more money, then the value of money goes down." Which will raise prices and cause inflation. "Manufacturers of large packaged consumer goods are deferring promotional offers to retailers and consumers while raising product prices, as they tackle and increase in commodity costs," Mint. Inflation decreases government debt by increasing tax collections as prices and wages rise, as well as reducing the overall value of debt due to a fall in the value of the currency. It would be a dangerous game to play because "except for the current account deficit, all the parameters that made India vulnerable in 2013 are again significantly above the EMDE average". "The rupee plunged from 53.67 recorded in May 2013 to a record low of 69.13 (intraday) against the US dollar on 28 August, which also marked the largest single day fall in  18 years," Economic Times (ET). That has gone down a 'taper tantrum' because the Chair of the US Federal Reserve Ben Bernanke hinted at reducing the amount of bond buying by the Fed. "India is the only country among the major emerging markets that has four of the five selected macroeconomic parameters much worse than average. Brazil, South Africa and Turkey have two misaligned, while Bangladesh and Thailand have one each." The RBI is serving the government, but is it serving the nation? We will know too late.