Paradigm shift in monetary and exchange rate policy-Pre & Post reform ERA

However, response of the RBI and government to stem the slide by resorting to liquidity squeeze there by spiking the interest cost and other administrative control like import restriction are only going to hurt the revival of growth and further deteriorate the CAD and put pressure on Rupee. Rather the policy mix should be to allow Rupee to find a level on its own while putting greater emphasis on fiscal consolidation and improving productivity in the economy.