The Reserve Bank of India (RBI) seems bent on a single-point formula to beat inflation — which is to increase lending rates. For the past several months, RBI has been increasing the lending rates and this has had no effect on inflation. The manufacturing sector, which borrows from the market, is increasing prices to cover the financial cost. And traders will do the same thing leading to a vicious cycle that will ultimately affect the common man. RBI and the government seem to have run out of ideas. Can eminent economists in India suggest some useful and effective ideas?
V Vedagiri, Chennai
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