Inflation ebbing?

India’s inflation rate in November came in at 5.5 per cent.

While this is higher than the RBI’s target of 4 per cent, it is a sharp improvement over the 6.2 per cent rate in October.

Moderation in vegetable prices is perhaps the main reason for the softening of headline inflation.

However, the moderation in inflation hides wide geographical variation.

Under these circumstances, the RBI could hardly afford to soften the interest rate, since price stability is essential for sustained economic growth.

M Jeyaram

Sholavandan (TN)

Ethanol push

Apropos editorial ‘Ethanol excesses’ (December 17), the Centre’s decision to go slow on blending of ethanol mix from the self imposed target of 20 per cent by 2025 to 18 per cent is a small set back to the environmental enthusiasts and the economy.

To compensate the gap resulting into the 2 per cent reduction, Centre needs to chalk out strategies for increasing the production of maize instead of the water-guzzling rice and sugarcane by making arrangements for free supply of seed and pesticides, but also ensure enough maize stock for the poultry and animal sectors.

Other options like using food waste and crop residue as an alternate input in ethanol production need to be given equal weight rather than having over dependency on maize alone as a source.

Though maize is not a water intensive crop, it degrades the soil in the long run. Farmer awareness on crop rotation is essential.

RV Baskaran

Chennai

Gold worries

Apropos, ‘Trade deficit at record $37.8 b in Nov on spiralling gold imports’, (December 16).

With rising commodity prices, India’s import bills for gold is on rise.

This is leading the country into a trade deficit and weakening rupee, which in turn stoke inflation.

The continuing surge in gold imports is putting pressure on the Current Account Deficit. Indian households can adopt alternate ways to invest in gold like financial products linked to physical gold, which are safe, simple and attractive — that allow the investors to hold a part of their portfolio in gold, while doing away with the complications of holding physical gold.

Mass awareness and acceptance of such financial solutions can help curb the gold import demand significantly, and reduce CAD.

N Sadhasiva Reddy

Bengaluru

Published on December 17, 2024