I SALUTE LEARNED RBI
GOVERNOR MR. G SUBARAO WHO HAS CANDIDLY EXPLAINED AND EXPRESSED HOW POOR MASS
ARE NEGLECTED IN INDIA WHILE FRAMING ECONOMIC POLICIES BY THE GOVERNMENT WHOSE
MINISTERS ARE PAWNS AND PUPPETS IN THE HANDS OF CORPORATE AND HIGH NET WROTH BUSINESS
MEN.
CORPORATE HAVE ENOUGH RESOURCES TO CREATE POWERFUL LOBBY TO IMPRESS UPON MINISTERS TO FRAME POLICY TO SUIT THEIR BUSINESSES BUT CRORES OF POOR WHO ARE SUFFERING IN ACUTE PAIN DUE TO EVER SHRINKING MONTHLY INCOME ARE TRUELY SILENT SPECTATOR AND SILENT SUFFERER OF THE AGONY
RETIRED EMPLOYEES WHOSE
SURVIVAL DEPENDS ON INTEREST MONTHLY INCOME HAS TO FACE GREAT DIFFICULTY WHEN
RATE OF INTEREST COMES DOWN
SAVINGS OF POOR AND
COMMON MEN FACES GREAT EROSION IN VALUE WHEN INFLATION RATE GOES
HIGHER THAN INTEREST RATE GAIN
AND THE MOST IMPORTANT
IS THAT SAVINGS TENDENCY OF POOR AND MIDDLE CLASS FAMILIES GETS
DILUTED AND THEY ARE TEMPTED TO INVEST IN GOLD OR LAND WHICH AGAIN RESULTS NOT
ONLY IN RISE IN CURRENT ACCOUNT DEFICIT BUT ALSO DILUTES INVESTMENT CAPACITY
OF THE GOVERNMENT AND WHICH ULTIMATELY AFFECTS GROWTH .
GOVERNMENT HAS MISERABLY FAILED TO KEEP BALANCE
BETWEEN COMMON MEN INCOME WITH INFLATION AND PRICE RISE .GOI WILL
HAVE TO CURTAIL FREEDOM , REGULATE REFORMATION TO MAKE IT PRO POOR AND CONTAIN
PRICE RISE AT ALL COST FOR MAINTAINING SOCIAL PEACE. .
12 FEB, 2013, 05.00AM IST, ET BUREAU
People suffering due to high inflation
forces RBI governor D Subbarao to hold rates
MUMBAI: It is the silent millions of poor squeezed by soaring prices who were
the driving force behind the Reserve Bank of India's decision to
keep interest rateshigh, the central bank's governor said on Monday.
"People who are worried about economic growth are typically quite articulate, that they have a platform to express their concerns," said Governor Duvvuri Subbarao, using language strikingly different from the cut and dry style usually preferred by central bank chiefs.
"I have sympathy with that view (that high interest rates was hurting growth). I am not saying that's an invalid criticism. But I just want to say that their voice is heard, but people who are hurt by inflation - the large majority of the poor - their voice is not heard."
Corporates and even Finance Minister P Chidambaram, who in the past has said inflation is a tax on the poor, have expressed unhappiness at RBI's reluctance to lower interest rates. After a nine-month gap, Subbarao lowered key interest rates late last month by 25 basis points.
A basis point is 0.01 percentage point. Economists affiliated to prominent banks and brokerages have forecast interest rate cuts of 50-75 basis points by December 2013.
"People who are worried about economic growth are typically quite articulate, that they have a platform to express their concerns," said Governor Duvvuri Subbarao, using language strikingly different from the cut and dry style usually preferred by central bank chiefs.
"I have sympathy with that view (that high interest rates was hurting growth). I am not saying that's an invalid criticism. But I just want to say that their voice is heard, but people who are hurt by inflation - the large majority of the poor - their voice is not heard."
Corporates and even Finance Minister P Chidambaram, who in the past has said inflation is a tax on the poor, have expressed unhappiness at RBI's reluctance to lower interest rates. After a nine-month gap, Subbarao lowered key interest rates late last month by 25 basis points.
A basis point is 0.01 percentage point. Economists affiliated to prominent banks and brokerages have forecast interest rate cuts of 50-75 basis points by December 2013.
 |
The
governor said the decline in growth was because of the slump in consumption and
the fall in exports. But it was the slump in investments that last week forced the Central Statistical
Organisation to forecast a 5 per cent economic growth this fiscal, which was
the most worrying as it was a portend of grim tidings for the economy. "It
(the slump in investments) is a matter of great concern because today's
investment is tomorrow's production capacity," said Subbarao, addressing
students at the Indira Gandhi Institute of Development and Economic Research in
Mumbai. "So if investment is not taking place today, our growth potential
on our way forward is going to be hurt."
While the statistics office stands by its forecast citing poor investments, Chidambaram is forecasting 5.5 per cent growth believing there are green shoots in the economy.
Subbarao expressed concern over the rising current account deficit, the excess of spending overseas over exports of goods and services.
"We would not worry so much if it was on account of import of capital goods, but here we are having current account deficit on account of oil and gold," he said. "The way we are financing it. We are increasingly financing it through volatile flows. We should ideally be financing through foreign direct investment."
Current account deficit for the September quarter rose to a record 5.4 per cent of the gross domestic product and is forecast to be above 6 per cent for the December quarter.
In an interview to this newspaper in October last year, Chidambaram had said the finance ministry was, if necessary, prepared to "walk alone" if the RBI did not respond to reform measures by cutting interest rates.
The central bank has backed reform measures announced by the government since September last month, but have stuck to their guns when it comes to rates, as inflation has not declined noticeably.
While the statistics office stands by its forecast citing poor investments, Chidambaram is forecasting 5.5 per cent growth believing there are green shoots in the economy.
Subbarao expressed concern over the rising current account deficit, the excess of spending overseas over exports of goods and services.
"We would not worry so much if it was on account of import of capital goods, but here we are having current account deficit on account of oil and gold," he said. "The way we are financing it. We are increasingly financing it through volatile flows. We should ideally be financing through foreign direct investment."
Current account deficit for the September quarter rose to a record 5.4 per cent of the gross domestic product and is forecast to be above 6 per cent for the December quarter.
In an interview to this newspaper in October last year, Chidambaram had said the finance ministry was, if necessary, prepared to "walk alone" if the RBI did not respond to reform measures by cutting interest rates.
The central bank has backed reform measures announced by the government since September last month, but have stuck to their guns when it comes to rates, as inflation has not declined noticeably.
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