Concerned over the rising inflation in the country, Reserve Bank of India Governor Raghuram Rajan described inflation as a ‘destructive disease’ adding that it has become imperative to bring down the prices as inflation hurts the country’s growth. Considering the fact that inflation in the country is particularly due to high demand as against the supply, the governor has expressed the need to reduce demand somewhat without having serious adverse effects on investment and supply. WPI inflation in the month of December recorded at 6.16% on y-o-y basis, which was above the central bank’s inflation comfort level at 4-5 percent.
By adding further, Raghuram Rajan has asserted that industrialists are complaining about high interest rate at a time when inflation is high at around 8 percent, which is restraining the RBI for lowering the interest rates. On the other hand, Indian citizens want to have their savings earning at 10 per cent interest to marginally beat inflation. The mismatch is because of inflation and central bank cannot satisfy both industrialists as well as citizens. Over the past two years, despite the high food items prices, the country also witnessed high prices for education and others services such as healthcare. The Governor further emphasized that inflation is hitting the long term growth prospect of the country.
The RBI Governor has also unveiled five pillars of the RBI’s developmental measures over the next few quarters. These measures include strengthening banking structure through new entry, broadening financial markets to increase their liquidity and resilience, expanding access to finance for small and medium enterprises and unorganised sector and improving the system’s ability to deal with corporate distress and financial institution distress by strengthening real and financial restructuring as well as debt recovery.
By adding further, Raghuram Rajan has asserted that industrialists are complaining about high interest rate at a time when inflation is high at around 8 percent, which is restraining the RBI for lowering the interest rates. On the other hand, Indian citizens want to have their savings earning at 10 per cent interest to marginally beat inflation. The mismatch is because of inflation and central bank cannot satisfy both industrialists as well as citizens. Over the past two years, despite the high food items prices, the country also witnessed high prices for education and others services such as healthcare. The Governor further emphasized that inflation is hitting the long term growth prospect of the country.
The RBI Governor has also unveiled five pillars of the RBI’s developmental measures over the next few quarters. These measures include strengthening banking structure through new entry, broadening financial markets to increase their liquidity and resilience, expanding access to finance for small and medium enterprises and unorganised sector and improving the system’s ability to deal with corporate distress and financial institution distress by strengthening real and financial restructuring as well as debt recovery.
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