Letters

Letters to the Editor dated May 16, 2022

George Verghese 4772 | Updated on: May 16, 2022

Delayed action by RBI

This refers to ‘Up and away’ (May 16). On the relationship between inflation and growth, they are neither directly nor inversely proportional to each other. Due to Covid pandemic and the Russia-Ukraine war, all major economies, especially the US, had resorted to monetary tightening due to galloping inflation and increase in money supply. Here it is felt that RBI was behind the curve and was reactive to global and domestic developments while tackling inflation prioritising growth by keeping the repo rate at 4 per cent for far too long a period. There were several devolvement of government securities on dealers as the RBI refused to pay higher yield as demanded by the market. Rise in inflation and abundant liquidity floating around with bank deposits yielding negative interest rates adjusted for inflation should have alerted the RBI for timely action.

The notion that inflation was ‘transitory’ due to supply-side constraints and was ‘self-corrective’ was not proved to be correct. The expectation of RBI that the government would act on curbing galloping fuel prices through fiscal measures to control inflation also did not materialise. All this led to delayed action by the RBI, laying more emphasis on growth over inflation. It is time government uses its fiscal policy to tame inflation and prevent the economy from entering into a phase of stagflation.

Srinivasan Velamur

Chennai

Is inflation beyond control?

The inflation index is prevailing far above the 6 per cent tolerance level fixed by the Monetary policy Committee of the RBI, reflecting thereby the distortions in arriving at the realistic situations at the ground level and the ineffectiveness of the policy measures. Time has come to think of un-docking oil from the inflation shuttle and find ways and means to fund oil requirements separately and remove the cascading effects of increase in the prices of oil and gas.

The need has arisen to revisit the fiscal policy and think of innovative measures to augment the revenues in such a way that the revenues which have inflationary connotations are minimised and those that have non-inflationary characters are increased. This sort of approach would turn out to be a win-win situation for the government, the RBI, the economy and the people, particularly in the poor and lower segments. There are umpteen ways to augment the non-inflationary revenues like STT, and other direct taxes.

TV Gopalakrishnan

Bengaluru

Wheat export ban

The decision of the Centre to ban the export of wheat in the wake of dip in procurement and a minor surge in the prices of wheat and atta is retrograde. It tantamounts to a knee- jerk reaction to the mounting inflationary pressures in the economy. Imposing stock-holding limits on wheat does not only militate against the spirit of the three farm laws it enacted with much exuberance and repealed later owing to the persistent vociferous protests from the farmers but also cast a big shadow over our credibility as a reliable global supplier.

The country’s wheat production has plummeted following a sudden spike in temperatures from mid-March which caused premature ripening and shrivelling of the grains, which have indeed raised the spectre of depletion in public stocks and its resultant possible threat to food security. However, the ban on exports of wheat does not qualify to be pragmatic policy-making as it affects both farmers and traders. Rather than resort to export ban, the union government should have opted for an increase in tariff or a minimum price below which shipments are not permitted.

M Jeyaram

Sholavandan, TN

Congress aiming high

Apropos ‘Congress announces major organisational reforms’ (May 16), it was interesting to learn that the grand old party now aims to enforce ‘one person, one post’ and ‘one family, one ticket’ rules even as it announced several wide-ranging organisational reforms at its ‘Nav Sankalp Chintan Shivir’. However, one truly fails to comprehend the rationale behind this dynastic party so proudly enforcing the ‘one family, one ticket’ rule alongside invoking a ‘saving clause’ thereto, reading as: ‘Exception’ to be made only when another family member has been working in the party for at least five years. It seems that such an ‘accommodative’ provision was meant solely for ‘saving the day’ for the Gandhi Family. Does it not also imply keeping the ‘Gandhi dynasty’ alive (through such backdoor politics) under the guise of its so called organisational reforms? Perhaps, the immediate ‘change of the guard’ at the party’s top level would have been a much better option.

SK Gupta

New Delhi

Boosting farmers’ income

‘Why doubling farmers’ income still remains a dream’ (May 16) is a challenge that needs a multi-pronged strategy, with emphasis on the fact that income from farming alone must be the target, not freebies and politically oriented financial support. Issues such as farmer-friendly crop insurance, easy market access to produce grown by small and medium farmers (on the lines of milk federations), scientific advice and inputs to increase productivity, storage and logistic support with last mile connectivity, and social security for farmers and their families (like healthcare, education etc) are a few major issues that need to be addressed.

Rajiv Magal

Halekere Village, Karnataka

Published on May 16, 2022
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