Tutorial #17: A batter(!) understanding of dosa economics


Raghuram Rajan has been featuring a lot in the media recently in promotion of his book 'I Do What I Do'. While I am yet to read it, there has been no escaping it as select excerpts and anecdotes have been making their way to the news every day now. Earlier today it was the turn of 'Dosa Economics' on BBC.

On the face of it, it is a simple concept of understanding the real interest rate as against the nominal one. Most people tend to look at interest rate in absolute terms since it is the most visible one and inflation as the silent killer is rarely understood. It was a noble attempt by Rajan at explaining this concept, though how many pensioners received the message even after the simplification of numbers is debatable.

However, I see no reason for Raghuram Rajan to have a monopoly on dosas in economics. Moreover, one would be hard pressed to find a dosa for ₹50 in a city like Mumbai, let alone 1-year fixed deposits at 8% and real-life consumer inflation at 5.5%. So, now you get to create your own realistic dosa economics, provided you have the appetite for it.

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