High inflation rates have been the root cause for higher interest rates. 2011 saw the RBI constantly increasing rates to reign in the monster of inflation. And for some time it did look like it was winning at the task. But since March 2012, inflation has started to rear its ugly head again. It has been steadily rising since then albeit at a slow pace. Unfortunately the reason for this is not higher demand but supply constraints. This in turn is the outcome of infrastructure bottlenecks which themselves are a result of the policy paralysis in the government. In short, the need of the hour is for the government to step up on its reforms. The RBI has done its job. It is time for the policy makers to do theirs'.
No comments:
Post a Comment