This is with reference to “Record output, stubborn prices” (Business Line, July 28). It is pertinent to note that prices of perishable items, such as vegetables, are steadily increasing. The rate increase of RBI has had no effect on this. An acceptable argument is that a healthy GDP growth, together with benefits of socially-inclusive government schemes, is putting more money into the hands of the common man and thus consumers are migrating from low-income to middle-income groups and hence, the fast growing demand is outstripping the supply response. Right at the time when the global economy is showing a nascent recovery, which could assist manufacturers, we are increasing the cost of capital to this sector. The RBI rate increase at this critical juncture could be a two-edged sword. No one step will be able to bring inflation under control. The government must adopt a multi-pronged strategy to contain inflation. Agricultural reform must go hand-in-hand with tuning up fiscal and monetary policies.
R. Narayanan, Ghaziabad (HB)
No comments:
Post a Comment