There is a strong correlation between inflation and cost of consumer goods and as inflation increases these goods become dearer. Keeping the food inflation to a lower number is a daunting task which RBI and government often grapple with.To control the inflation the government has to bring in strong macro economic and monetory policies. Secondly, the Central bank of the state, i.e., the RBI has to adjust some of its instruments to lessen the adverse effects of inflation. Finally, the RBI and government has to work in tandem to reduce the ill effects of inflation.
The recent measures taken by RBI include 0.75 percent points increase in the repo rate over six, making the repo rate the sole policy rate and the creation of the new Marginla standing Facility from which banks can borrow at 1 % point above the repo rate are all significant measures.
Food for Thought: Inflation is good for a growing economy. It suggest that the various industries are growing and is vital for a devoloping country like India, but too much inflation brings instability in food and consumer goods and deprive the poor people from their basic needs.
-Vish
Excerpts from : http://www.thehindu.com/opinion/editorial/article2132338.ece
The recent measures taken by RBI include 0.75 percent points increase in the repo rate over six, making the repo rate the sole policy rate and the creation of the new Marginla standing Facility from which banks can borrow at 1 % point above the repo rate are all significant measures.
Food for Thought: Inflation is good for a growing economy. It suggest that the various industries are growing and is vital for a devoloping country like India, but too much inflation brings instability in food and consumer goods and deprive the poor people from their basic needs.
-Vish
Excerpts from : http://www.thehindu.com/opinion/editorial/article2132338.ece
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