Food Inflation: In calculating the new Retail Inflation Rate figures, the Central Government is considering reducing the weightage in food items and it is also being considered that it will be used in determining the interest rates. Food inflation should be kept separate from this. But former RBI Governor Raghuram Rajan does not agree with this thinking at all. Raghuram Rajan has expressed his disagreement with the idea of not including the prices of food items in the inflation rate and said that this will reduce people’s trust in the Central Bank i.e. Reserve Bank of India.
Raghuram Rajan, while talking to PTI, said that while determining the inflation rate, the basket of such things should be targeted which are used by consumers because these are the things on which consumers form their perception about inflation and their expectations regarding inflation. Affects. The former RBI Governor said, when I became the Governor of RBI, we were targeting the Producer Price Index. But this has nothing to do with the challenges faced by the average consumer. He said, when RBI says that inflation is low then the Producer Price Index should be looked at. But consumers are facing different types of challenges, so they are not really ready to accept that inflation has come down.
Raghuram Rajan was replying to a question on the suggestions made in the Economic Survey 2023-24 regarding keeping food inflation rate out of the calculation while setting interest rates. He said, if you leave out some of the most important parts of the inflation rate and say that the inflation rate is under control, but food prices are skyrocketing or the prices of some things are rising which are not kept in the inflation basket, then you Know that people will not have much confidence in the Reserve Bank.
In the Economic Survey 2023-24, Chief Economic Advisor V Ananth Nageswaran had advocated keeping food inflation out of the process of determining RBI’s policy rates. He said in the survey, monetary policy has no effect on the prices of food items because supply affects the prices.
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