With the background of unexpected rate cuts this year, the inflation numbers are providing more room for the central bank governor to ease monetary policy and making the clamour for him to do so louder.

The annual rate of wholesale price inflation (WPI) decelerated further to its lowest in six months at (-)2.65% in April from (-)2.33% in the previous month. The annual rate of inflation based on WPI was 5.5% in April 2014. The country's retail inflation based on the consumer prices index (CPI) was also on the downswing in April by 40 basis points to 4.87%.

The key elements to consider in this situation are the predilections of the governor himself, and the way the government has sought to make changes this year to the very domain of the RBI.

Here, it is instructive to hear RBI Deputy Governor Urjit Patel on the thinking of Rajan, who in 2005 had predicted the financial meltdown three years later that is still affecting global economy and feels stronger in his belief that global markets now are at the risk of a crash due to the competitive loose monetary policies being adopted by developed economies.

"We are in the midst of the age of competitive depreciation and of a beggar-my-neighbour philosophy. It brings to mind an old African saying that when elephants fight the grass suffers," Patel said at the press conference to announce the February policy review, on the trend of accommodative monetary policies being adopted by developed economies.

"While the ECB (European Central Bank) and the Bank of Japan are printing money and devaluing their currencies on one hand, the U.S. economy is reviving on the other. Anyone in the middle is getting crushed," he said.

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