Sunday, 3 June 2012

RBI-Protecting whose INTEREST? Depositors or Borrowers?

Aam Aadmi and Inflation/RBI, behind the curve
The baby steps taken by RBI in taming the inflation has put the common man in serious difficulties.Instead of hiking the interest rates at a pace of 25bps, RBI must have hiked the rates by 100bps at the initial stage itself so that inflation would have come down drastically by now.
Another action that could have taken by RBI to tame inflation was to stop credit to unproductive and speculative sectors and increase to food production. Most of the banks have not reached the priority sector target of 40 per cent and even 18 per cent target set for agriculture sector also has not been achieved and still RBI is silent on these areas.
The reason put out by the RBI for not hiking the rates aggressively is that it will hurt growth is mainly due to the media hype.