Infaltion and India

India is a land of diverse culture, caste, languages etc. Ironically, one thing that is common across the country is inflationary pressure. The country was already bleeding with a high inflation and the recent hike in petrol prices has added fuel to the fire. It is not only the direct consumer of fuel who will be affected but also the others. This will have a ripple affect on other commodities as well and hence the cost of other essential commodities like food is bound to soar.

The RBI has also chosen to curb inflation over short term growth. In its bid to do so, RBI has already increased the rates viz. repo and reverse repo. Following the suit are the banks who have increased their lending rates and hence soon there will be a liquidity crunch scenario in the market. But this is a negative check implied and this can never let a nation achieve its goal in the longer run.

Inflation is a result of deficit in demand and supply and what RBI is doing is to curb the demand but ideally it should be the other way round. India should try to increase its supply by making optimum utilization of the resources. There is a dramatic scope of increasing the yield in the agricultural sector by making use of the modern technologies. India should also switch to cheaper source of power like nuclear energy and renewable energy like solar, wind energy. The government of India should have open door policy for the companies both situated in India and abroad who want to start their operation here in India. The more the organizations come to India, the more development will take place and hence the more supply of the necessities will increase thereby curbing inflationary pressure in a positive manner.

The human capital should be seen as a resource than a burden on the country. India is fortunate to have a young population at this stage so there is a need to mobilize this human capital to generate wealth for all. This can be done bringing down the corruption in our system and provide opportunities for the youth to excel.