Inefficiency of the monetary policy
Inefficiency of the monetary policy Why Increase in Repo and Reverse Repo Rates has not been Able to Tame Inflation? Inflation is the biggest problem of India. Spiraling inflation close to double digits have taken economists, politicians, businessmen, policy makers & Mr. Dhruvi Subbarao aback. This may be pronounced as the toughest term for any RBI Governor who has to face constant criticism from almost every newspaper for constantly revising the key rates upwards. And on October 25, yet again it happened for 13 th time since March 2010. The spiral of inflation has caught the economy and RBI can’t do anything at the moment. Rising rates have affected the economy and growth has been compromised. With food inflation at 10.63% and general inflation being nearly 10% it’s a tough call for the policy makers. There is a tradeoff between inflation and growth and RBI has chosen to favor policies to reduce inflation. The interests of the common have been kept at the top. With