Indian School of Business (ISB) Professor Prasanna Tantri has issued a stark warning to policymakers, urging them to shift focus from defending the rupee to actively controlling inflation. His comments come as India's wholesale price index (WPI) inflation surged to 11.39% in September 2026, with retail inflation also rising to 5.54%.
The Growing Inflationary Threat
According to data from the Ministry of Commerce and Industry, wholesale inflation accelerated significantly from 9.92% in August to 11.39% in September. Professor Tantri highlighted that manufactured-product inflation is now outpacing food inflation, indicating a broader inflationary pressure across the economy. Retail inflation, too, has shown an upward trend.
"Our priority should be controlling inflation, yet policy seems preoccupied with defending ₹100 to the dollar. Blaming external factors is no substitute for action," Tantri stated, emphasizing the urgency of the situation.
Risk of Entrenched Inflation
Tantri cautioned that delaying decisive action could allow higher inflation to become deeply embedded in economic expectations. Once inflation feeds into wage demands, rents, and school fees, it can become a self-reinforcing cycle, making it significantly more costly and difficult to contain in the long run.
He drew upon economist Milton Friedman's observation that monetary policy operates with "long and variable lags." This means there is no instant fix for disinflation, and waiting for economic data to deteriorate further only risks a more painful adjustment period later.
Call for Forward-Looking Action
The finance professor stressed the need for proactive measures, starting with the elimination of negative real interest rates. He pointed to India's own history, specifically the early 2010s, as a cautionary tale on the costs of tolerating sustained inflation. "We need forward-looking action now, starting with an end to negative real interest rates. The early 2010s taught us the costs of tolerating inflation. We should at least learn from our own history," he urged.
Adding to the broader economic discourse, Sanjeev Sanyal, a member of the Prime Minister's Economic Advisory Council, recently advised against pursuing faster economic growth at the expense of macroeconomic stability and inflation control. Sanyal suggested that pushing GDP growth significantly beyond 7% under current conditions could risk inflation exceeding the Reserve Bank of India's upper tolerance limit of 6%, reinforcing the cautious approach advocated by Tantri.