Prices are bubbling up. Food, fuel and fertiliser costs are surging almost daily. Inflation seems to have got a free pass in India. The country’s wholesale price index, which tracks goods at factory gates, rose almost 13 percent from a year earlier in January. The gauge has recorded double-digit increases for 10 straight months. The benchmark consumer price index, which also includes services, has breached the top of the Reserve Bank’s tolerance range of two to six percent annual gains. The central bank is eerily silent or remains constantly tolerant to rising inflation. RBI seems to have forgotten the universally admitted principle that makes central banks play a very crucial role in ensuring economic and financial stability by controlling inflation.
Unfortunately, India’s Reserve Bank is still non-committal on inflation control. The public savings are fast eroding their value. There is little sign of fresh large industrial investment as high prices have put demand under pressure. Unemployment is sharply rising. Under such circumstances, economic growth is bound to fail the target. RBI must explain why it is dithering on inflation control measures and protection of the value of Rupee.