Trade-off between inflation and unemployment: A study with an Indian perspective

Abstract

The current monetary policy adopted by RBI has been towards curbing Inflation and despite a change in guard at Delhi and a GDP slowdown, key interest rate has been maintained above 7.75. There is always a clamour before any monetary policy review to cut rates by the Industry and government . However voice of an important stake holder in the inflation-growth game – the general public, gets left out. Indeed many in the general public are net lenders in the economy (as opposed to Corporates and government who are net debtors) and with drop in rates would lower their returns on savings. In this study we would like to get their views on this. We would like to answer the question whether RBI’s hawkish stand against inflation is perceived to at the cost of employment levels in India and which of the two is perceived to be more important by a majority of the Indian populace.