India currently faces the classic economic challenge of balancing between growth and inflation, with both being in a sort of vulnerable spot. India's overall consumer price index (CPI)-based inflation rose from seven per cent in August to 7.4 per cent in September — remaining over RBI's tolerance band for the ninth straight month. These inflation figures indicate a steep increase in commodity prices — with vegetables and cereals being the worst sufferers. Given the fact that these are items consumed on a daily basis by households, their impact on the inflation outlook is paramount. These price gains are contextualised by a potential shortfall in Kharif output of rice after the wheat production was already below the mark — inching closer to the buffer norm limit. Currently, with the festive season setting in, the prices of wheat are reported to have shown a considerable increase. Vegetable prices have also registered an uptick on account of the damaging rains at the fag end of the monsoon. Parallel to these price pressures, the growth scenario is no less daunting. Earlier this month, the World Bank lowered its growth projection for India below the June estimate to 6.5 per cent. The International Monetary Fund, too, lowered its estimate to 6.8 per cent — much below the projections for 2021. With private investment being on a persistent decline, India's growth prospects are solely based on post-pandemic consumer retail spending and government spending. As MPC member Jayanth Varma puts it, "there is a limit to how far the government can keep that engine (government spending) running because there are fiscal constraints." It is against this constricted background that the dissenting notes of Jayanth Varma and Ashima Goyal make sense. Varma held that the RBI should press the pause button on interest rate hikes — despite high inflation — to avoid stalling recovery in economic growth. His argument basically harps on the usual time lag that policy rate hikes take to show results. For the record, the RBI has already increased the repo rate cumulatively by 190 basis points since April-May, with the net impact of all steps taken resulting in around 250 basis points increase. Varma feels this increase might conceivably be adequate to bring down inflation close to five per cent by mid-2023. For inflation, he thinks, the RBI has already "given a strong dose of medicine and the time has come to wait and see if that medicine works." He is rather more apprehensive about the growth outlook, which he warned is very fragile, and will deteriorate further if a policy rate hike is opted. The argument appears valid. The US Fed is adamant about raising policy rates but, owing to its altogether different socio-economic scenario, India cannot follow the US trail. Furthermore, monetary measures may not be the appropriate tool to check the rupee's depreciation against the dollar, beyond a certain limit. Both the Finance Minister and Jayanth Varma drew a line of distinction between "the strengthening of the dollar" and "weakening of the rupee". This distinction indeed holds some meaning. It, at least, is indicative of the areas that need to be worked upon on an urgent basis. India is an import-oriented country and is experiencing imported inflation at the moment. Its high dependency on commodity imports has made it vulnerable to global headwinds. There is a limit up to which monetary measures can be relied upon under such circumstances — particularly when such measures have their own set of fallouts in terms of growth. Perhaps it is the time when the RBI should make a difficult choice of safeguarding growth prospects and wait for its policy tightening to fructify over the coming months. Meanwhile, it can work on strengthening its export sector, boosting private investment and retail consumer spending, and balancing government spending. A more stable growth scenario will provide policymakers with a leeway to tinker with policy rates in future if needed.