Avert slowdown

| Updated on March 12, 2018 Published on November 18, 2011

In the editorial “Dipping growth” ( Business Line, November 17) it was mentioned that Indian industry staged a recovery, when the WPI inflation also began to head up.

Higher output coexisted with the phenomenon of rising prices, led to persistent inflation, and ultimately to an erosion of purchasing power. The consumers were forced to reduce discretionary spending.

Decrease in demand caused the drop in IIP growth. This reflected in sectors such as cars and consumer durable manufacturers. High inflation results in lower consumer demand and lower growth.

The RBI's monetary tightening measures, such as successive hikes in the policy rates, could do very little to control inflation during this fiscal. Buying a home or a vehicle is made more expensive.

These types of measures dent growth. There is a fall in after-tax profits of firms too. Supply-side inflation tends to render supply response weak. A lot of pessimism in the producers paves way for a prolonged slowdown, which is to be averted.

T. V. Jayaprakash


Revision of fares

The news report “Railways plans to introduce new freight policy” ( Business Line, November 15) containing the Railway minister's statement that rail fares may be raised is a matter of concern for the ordinary man.

In the midst of the soaring cost of living, which shows no signs of abatement, the rise in rail fares is cause for worry. This is not only because higher fares are to be paid for travel, but because it is likely to worsen the price situation.

The latest reduction in petrol price is a relief, since it will have some beneficial effect in all sectors of the cost of living. There is actually no rise in the price of diesel to warrant a rail fare rise. It is hoped the Railway Minister will rethink the proposal of a fare hike.

T. R. Anandan


Published on November 18, 2011
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