Prevention cures

This is with reference to ‘Inflation targeting is not a good idea’ by Kanhaiya Singh (May 8). Now that the disease has been identified and the climate leading to the disease analysed, is prevention possible? The RBI is perhaps more suited to being a warning system that can also caution about the possible symptoms leading to high inflation. No amount of precaution can prevent the outbreak of epidemic because certain viruses are new and not immediately preventable; perhaps inflation is also such a disease.

The RBI cannot do away with inflation targeting since it controls money supply and stipulates interest rate within the overall policy framework of price stability and growth. There are a lot of causes which lead to high inflation such as high population growth, poor food storage facilities, infrastructure constraints, ever increasing demand for currency from the trading community, falling domestic savings, etc. In spite of all the odds, the RBI is brave enough to target inflation in the range of 4 per cent. Let us hope it can be achieved in the coming quarters.

Mathew Abraham

Thiruvananthapuram

Inflation appears to have become a big issue over the last two decades especially since the economy was liberalised, and has become the headache for the government as it is failing to satisfy growth expectation due to the high interest rates caused by inflation. On the food front many strategies have been tried by the NDA; it has retained the same strategies used earlier. As food supply is dependent on the monsoon, storage and distribution need to be put in place. Fuel is a commodity governed by the international environment.

If the government is ready to do something to relieve the pressure of extra inflation it has to keep bearing the inflation due to rise in wages and prices of commodities used in infrastructure till such time the supply aberrations are adequately corrected. This is not feasible.

The decision to target inflation has been taken as the government knew its constraints. It wants whatever investment can be done easily so that inflation can stay within 2-6 per cent during this time. It is not possible to ignore the argument of targeting inflation in the given context.

RK Arya

Faridabad, Haryana

The rich are powerful

The verdict in the Salman Khan case established equality before law but simultaneously the capability of the rich and resourceful. No ordinary convict could have got interim bail from the High Court within hours of the judgment by a lower court. The opinion about the quantum of punishment was divided. Some found it quite in order while the other view was that due to his celebrity status he has been punished harshly in comparison to the punishment awarded in other hit-and-run cases. Justice has taken 13 years for the victims of the case. We have the instances of the verdict coming after 40 years (LN Mishra murder case) and 28 years (Hashimpura massacre case). Crores of cases are pending in the courts. This makes a mockery of our justice-delivery system and calls for reformative measures.

MC Joshi

Lucknow

Clamp down, then climb

This refers to your editorial, ‘Sobering sell-off’ (May 8). As rightly said there is no reason to attribute the recent sell-off to a multitude of issues. However, it has become our practice to make a hue and cry when FPIs wind up positions in our market without reckoning for the fact that they would also like to book their profits and repatriate the proceeds before entering the market again in a big way. FPIs as a class are here to stay along with other Asian markets like China, Brazil, Russia.

With the reign of unconventional monetary policies in the UK, European Union, Japan and the US, which are not likely withdraw fully from QE, the abundance of liquidity has to find a safe haven where profit-making is possible. India has proved to be one such place. In fact the sell-off by FPIs has helped domestic investors who may wait for their return to our stock market when it would be the former’s turn to book profits.

Rugmani Vinod

Thiruvananthapuram

Send your letters by email to bleditor@thehindu.co.in or by post to ‘Letters to the Editor’, The Hindu Business Line, Kasturi Buildings, 859-860, Anna Salai, Chennai 600002.

COMMENT NOW