Thursday, September 1, 2011

Hopeless RBI

Reserve Bank of India(RBI) governor thinks he can control Food Inflation by increasing Interest rate. High Food Inflation has nothing to do with the Interest rate. It can be controlled only by increasing efficiency  and reducing leakage in the Farm and Food distribution system. Government's approach is risking growth, creating more pain for middle/lower middle class on top of high Food inflation.

I am ok to compromise with growth if Inflation can be controlled, but till now RBI has not been successful. Policymakers - please keep in mind India had huge food inflation even during Nehru-growth days. So growth is not the culprit - at least for food inflation.

Stop playing with RBI rates( reduce it) and better concentrate in reducing the wastage in Food Corporation of India warehouses.

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