The RBI- the Money chamber, is really moving out of control… Though it really wants to cut inflation things don’t work the right way possible… With an unbelievable 7 rate hikes RBI stands baffled with the rising inflation and price hikes. Banks are pettier than how RBI is; we all know that quite possibly... Banks rely on RBI for their circulation of money and basic funding. RBI had a hike of its repo rates whatever banks weren’t feasibly able to generate their own income.
The oil and fuel prices rocketing to a great range is one of the most important reasons of rise of inflation…. As a result, inflation led to a situation where people weren’t able to pay their interests as interest rates hiked up, lessening their savings to more than a half as to what had been in the previous years and with destruction of farms to make industrial townships all over the country is one main reason for food inflation. Though there were good rains India hasn’t found any increase in its agricultural growth due to increasing housing and industrial sites.
Exporters again can’t be happy with what is happening on the Transfer pricing side... The TP doesn’t basically allow 5% margin rates on one transaction or import... If there are two arms length prices it can then permit the 5% margin rate.
In case of banks, Loan rates are high enough to cause the desired inflation. The banks need a good income and that is why they charge higher interest rates. This may not really be helpful because RBI has fixed interest rates for banks where crossing the limit wouldn’t make much sense. The liquidity possibilities from other countries are still obtainable but banks must ensure that there are proper and careful usages of such funds. The dividend is eventually destroyed…
Financial Inclusion is something that people can stop facing in inflations… FI is a situation where the lower or the most vulnerable classes don’t get funds that they possibly have to. Inflation applies to all citizens so there is a uniform hit to all the classes....
Whatever is the reason, class or industry inflation does affect everyone in the country...
