Since last three months the prices are going up and now it has crossed into two digit from 9.90 to 10.56 per cent. There are constant spurt in the prices of vegetables, edible oils, pulses and foodgrains. This has also resulted into inflation.
The Industrial Sector and the Central Government were expecting that the Reserve Bank of India would announce cut the lending rates of banks in its upcoming monetary review on January 29. But the Governor of the RBI Mr.D.Subba Rao has said in a function that inflation was still high and it would not be right decision to effect cut in Repo rates. The monetary and fiscal sides also have no room stimulus.
One of the major reasons of price rise in vegetables that in 15 to 20 days severe cold conditions and cold wave accompanied with frost conditions damaged the vegetable farms and hampered its movements. The prices of foodgrains, pulses and oil seeds, the Central Government increasing support prices on all the crops and states are purchasing entire stock. It is causing shortages in the markets. The prices of wheat and its flour are going up for consumers.
The country is facing the shortfall in edible oils since long to meet the domestic requirement of low budget households through the Public Distribution System, we are importing palm oil from Malaysia and Indonesia. This year the import of this item has gone by 35 per cent from 6.7 lakh tonnes in December 2011 to 8.76 lakh tonnes in December 2012. At one time our main edible oil was of seasom and later groundnut oil replaced it. Now it is being replaced by soya oil. The soyabean is not a Indian crops. Soyabean has been imported from America but now it is totally indinised is our agricultural system.
In wheat we have some very queer situation. This is bumper crops in these years and its godowns are overflowing. To make room for the coming crops wheat is being exported. This has also resulted into its price rise in the domestic market. Recently the Government has enhanced rail fares and there are indication to increase power rates. All these factors are pushing up prices of all the commodities. But the RBI Governor Mr.Subba Rao wants decrease in prices and inflation to bring down Repo rates. How it is possible when the Government is constantly increasing the prices. Even the LPG may cost Rs.120 more per cylinder.
The RBI’s rigid policy is affecting the Industrial Sector severely and growth rate is going down. To salvage it there is no other option but effect drastic and continuous cut in bank lending rates.
Founder : Late Shri Ramgopal Maheshwari