Reserve
Bank of India has adopted some strict measures to check inflation.
The bank in its annual monetary policy has increased Cash
Reserve Ratio (CRR) by 0.25%. As a result of this, the CRR
of the RBI has increased from existing 8% to 8.25%. There
is no change in repo rates. Present increase would be effective
from May 24. Besides raising the CRR, the government has also
adopted several measures to rein in inflation. With the increase
in CRR, a sum of Rs 9 crore could be withdrawn from market,
but it would not be sufficient to put the soaring inflation
under check completely. Though the RBI on its party has taken
initiatives, the same are not sufficient. No measure has been
taken to control consumption of oil(fuel). Since hike in crude
oil prices is also responsible for inflation, initiatives
should be taken to reduce consumption fuel. The measures taken
by the RBI are merely tip of the iceberg as it would help
only reserving some cash in the market. The root cause of
inflation, future market, is not being checked. The Bank has
not adopted strict and necessary action to lessen or check
the inflation. The steps at government level would also not
be very much effective. The assertions that increasing price
would fall in coming three months with government efforts,
carry little weight, because the rainy season would be at
the door in three months and if it rains sufficiently, prices
of commodities and other items would fall itself. If the government
is quiet serious in controlling inflation, it will have to
take solid and strict initiative, apart from whatever technical
measures taken by it.
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