Rising inflation issue is continue in India. It is noticed highest of last 16 years. It is 12.44 at present and there is no positive happening in near future. The RBI Governor is making responsible to the government for making it difficult to curb the inflation rate.
There is already very bad impact in society of increasing inflation and if it will continue more then the situation may be out of control. The lifestyle of the people and Indian economy has changed a lot since the day inflation is increasing. The economy has changed drastically. Prices of various commodities have increased a lot and no end is visible in near future. There are many short term and long term consequences of this which the government must think about.
The RBI governor’s annual statement on monetary policy was no doubt his swansong but one cannot say he has used the monetary tools for the last time. He was right when he implied in the quarterly review of his annual policy statement (vide, ‘RBI hikes interest rate’, dated July 29, 2008) that the government was making it difficult for the Central bank to fight inflation. The government has made things even more difficult for the Central bank now by approving a massive payout (beyond what the Sixth Pay Commission recommended) for its employees. There is lot to come out soon.