Dear Kaushik,
Apropos your reported predictions, I have had to say at Facebook:
Subroto Roy is appalled the GoI’s Chief Economic Adviser has declared (as the PM and the PM’s Chief Acolyte had declared in earlier months) that prices are trending downwards stochastically but amused that at least a stochastic (“fluctuating”) trend got mentioned.
Governor Subbarao has been set a small challenge the other day to release asap for public scrutiny the comprehensive macroeconomic model he says he believes the RBI has — which may be hard if no such model may exist at the RBI. Nor does your Ministry or anyone else in New Delhi have such a model. So what is the Government’s precise scientific basis for predicting a slowing of inflation? Nothing at all?
The Government needs to begin to try to understand that inflation does not slow down in circumstances where real public debt per capita and money supply have been growing exponentially for decades — to the contrary, inflation tends to rise to dangerous heights! Debauching of fiat money would hardly have been allowed if the rupee was a hard currency because we would have seen an honest exchange-rate crashing through the floor with this kind of inflationary finance the Government has given us over the decades. There is, sad to say, zero chance of the rupee becoming a hard currency that all one billion Indians may feel confident about so long as such inflationary finance continues unabated.
Cordially yours
Suby
Independent Indian: Work & Life of Professor Subroto Roy 