Dr Subbarao explains in detail about Monitory Policy

No doubt this is the best interview of Dr Subbarao, RBI governor explaining the Monitory Stance and Policy Initiative precipitations out of the various Economic compulsions.

Needless to harp upon the ' Lack of Creditability' Of RBI in controlling the spiralled inflation. This blog has been Vocal since the December 2010 in RBI's Baby Steps strategy and not recognising the Soaring inflation and rising Inflation Expectations, from winter. The Wild Chase, of Inflation from RBI coincided with the May   Elections and got even bitter in June. RBI miserably failed on its very essential mandate of Controlling Inflation. The Planning Commission, Economic Advisor of P.M. and F.M. all sailed there Hats and endlessly prayed for and wished that Crude Oil and commodity rally to Fizzle. It was more like bear who had gone Short on Crude.

 Agricultural Prices and Political fiscal policy 

One of the essential parameter is the continuous escalation in Minimum Support Prices and its use as a ' Political Carrot'. Its today government Raised the M.S.P. for wheat while the World production of Wheat is at Highest and likely fall in international Wheat Prices. Which are presently running way below this year's Prices. This Fiscal in discipline is going to cost a lot for the ensuing year i.e. 2012-13. Moreover, it is going to add to food inflation directly.

Indian government should not wish away the international economic events like recesion in Europe and U.S. as likely causes for ' falling International Price " and should Wage a bet on Future commodity price deflation. Further, the numerical game of falling inflation due to base effect should not be construed as a cooling of Inflation.

Diseases of Inflation : 

1) Inflation eats away the net savings and is helpful to the Borrower. While, it suits Indian Government as it is the largest indisciplined borrower. 

2) Inflation puts the economy and Industry in Doll drum. As seen, now the Price and Interest rate Mis matches hit the Investment decisions, Short- Medium term imbalances and stifle growth prospects. As less jobs are created leading to cooling of the net demand. The Stag- Flation is usually very stick and ordinate's for longer time. Needless to say, an economic subvention and marked slow down.

3) The Real growth failure is substituted by ' optical Growth ' and results in wastage of resources

4) Inflation is Curse for the Common Man , House wives and it hurts hardest on retired people surviving on the Bank Balance.

While, the Numerous Advisor of P.M. and theoretical stalwarts have no sympathy for the all, As they are Busy in posturing for the Power. While, Most of them have a very limited time in balance.