Is RBI acting as a Friend or a foe to Inflation?
Inflation is like fire as it can be beneficial for promoting growth of an economy but when it increases without bound, it takes the form of raging fire engulfing everything in its way and making livelihoods difficult. India at present is facing both an increasing inflation and a precarious need to maintain the growth after the impact of the pandemic. The probable reasons for high inflation in the domestic market are listed as follows Ø The supply disruptions caused by the Covid-19 imposed restrictions across the trading channels which bid up the costs of inputs further fuming prices to exorbitant levels. Purchasing Manufacturers Index (PMI) for the quarter three of 2020-21 represents that around 57.8% of manufacturing firms and 52.2% of services firms faced increase cost pressures and raised the selling prices to around 37.33%. Ø The recent pent-up demand after the successful containing of recent 3 rd wave and various liquidity measures undertaken by the governments all over the wor...