The Reserve Bank could not do anything despite increasing the interest rate continuously. On the other hand, the festive season is a double blow to the economy. On the one hand, the rate of inflation has again moved towards 8 percent. On the other hand, industrial production fell flat. Instead of rising, it fell below zero, falling to the lowest level in 18 months.
Data from the Central Ministry
According to the data released by the Central Statistics Ministry on Wednesday, the rate of price increase in the country’s retail market in September reached 7.41 percent again. Which is the most since last April. And it was pushed there mainly by the high prices of food products. In another statistic, the financial activity took a hit in August. Industrial growth fell to 2.2 percent in July. Industrial production contracted by 0.8% in August.
Production in factories has decreased. Compressed mining and consumer goods sectors. According to the concerned circles, the collapse of the productive sector means a crisis in the labor market as well. Experts say uncertainty in the global economy, the high cost of fuel and raw materials, and the increased cost of raising capital at high-interest rates have weighed on financial activity. It is feared that the Reserve Bank may raise the interest rate further due to the rise in prices. In that case, the cost of repayment of various loans including houses and cars will increase.
Statement from economist
Economist Abhirup Sarkar claims that the reason for the price increase is the price of oil. Despite the reduction in the price of crude oil in the world market, fuel has not become cheaper in the country. On the other hand, raising interest rates has created problems in the manufacturing sector.
According to the opposition, the center has failed to reduce the prices of goods. There is no direction for improvement in the industry. There is no employment. However, the country’s economy is in a good state of hype. Congress leader Jairam Ramesh quipped in a tweet, “Retail prices hit 5-month high & food prices rise 8.6%… But does the Prime Minister take it? Finance Minister went to the Chennai market, it showed well. But the unstoppable pace of price hike remains.”
The price increase of food products is again 8.60 percent. Highest in 22 months. Some products have become expensive due to supply shortages and price increases in the world market.
More rain in the country is responsible for some. However, according to the concerned quarters, even though the Reserve Bank increased the interest rate by a total of 190 basis points, it could not bring down the price increase within the tolerance limit (6%). It has been delayed for 9 months. The reason for this failure should be communicated to the center in writing. As per the RBI Act, the apex bank is bound to pay an apology to the Center if it does not meet the rate hike target for three consecutive quarters.