Although with government advisors and RBI experts claiming that there is no need for any monetary tightening as the prices will flatten out with the rabi crop about to hit markets, there is no denying the fact that this is yet another test on the tightrope for the UPA to balance credit availability to India Inc. thereby creating jobs and taming inflation. Unfortunately, as long as politicians continue to play ‘sugary’ politics and developmental issues remain on the backburner, high liquidity would continue to chase few assets and demand would continue to rise. As Dr Anand asserts that to put the leash on inflation especially with regards to food, “only long term solution lies in achieving rapid rise in productivity that can control or bring down costs per unit of production - vast possibilities remain in this regard.”
But with the trinity of abysmal infrastructure, rogue politicians and burgeoning population ruling the roost, no central banker, interest rate cut or monetary tightening can climb this stallion without hurting the backbone. For now, the only definition that can be given to inflation, as in the words of Milton Friedman, is “inflation is taxation without legislation”.
But with the trinity of abysmal infrastructure, rogue politicians and burgeoning population ruling the roost, no central banker, interest rate cut or monetary tightening can climb this stallion without hurting the backbone. For now, the only definition that can be given to inflation, as in the words of Milton Friedman, is “inflation is taxation without legislation”.
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