This is with regard to “Inflation hits 7-month high as food prices soar” (Business Line, October 15). ( Trends in inflation over the last two years show that the monetary policy measures are not acting as an effective antidote. . Various supply side constraints keep fuelling inflation from time to time. Onion price hike is one example. Similarly, international crude oil prices continue to add to inflation woes in India. The headline inflation hardly gets impacted and hence the RBI approach of containing inflation though monetary policy measures may not work in India. When minimum wages are hiked every year and minimum support price for foodgrain is upped periodically, how we can expect inflation to go down? With Government setting the 7th Pay Commission, more people, including in the private sector, will have greater purchasing power, which is a sure-shot recipe for inflation. In view of all this, we must learn to live with neo-normal inflation. Inflation will continue to be high in the country and we need to move beyond the text book approach of inflation control. We need to look at high growth rate which will increase revenue sources for the government, helping it start welfare measures for poor people. Food security can be supported by high growth resulting in high collection of direct and indirect taxes. Shouldn’t the RBI look at growth more than inflation? It is now time to think like a contrarian.
- Vivek Sharma, Mumbai (HBL)
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