RBI at the crossroads
Apropos ‘Is MPC responsible for inflation?’ (November 2), there can’t be two opinions about the fact the given the myriad domestic and global causes of price rise, monetary tools at the disposal of the RBI has limited play.
Notably, the Centre appears to be overly worried over the MPC’s failure to rein in inflation despite the latter having resorted to the hike of 190 basis points in the repo rate during last four months, and more such hikes not being ruled out too. What else could explain the government seeking its explanation on inflation control?
The RBI Governor had earlier announced that it may take nearly two years before retail inflation is brought back within its targeted inflation band of 2-6 per cent.
Inflation hurts the poor and the middle-class the most and they form the majority of the population. Hence inflation should be fought on a large scale. One of the important measures to tackle inflation is to prevent the hoarding of food by black-marketers and other traders. Secondly, due to the lack of modern storage systems, foodgrains are often allowed to rot in the open. Hence the government should, on a war footing, build modern and mechanised storage systems to store bumper stocks.
Thirdly, there should be cooperation and active communication between States for the movement of food items from one State to another. Good roads and a smooth transport system facilitate this.
With reference to ‘Two cheers’ (November 2), there has been substantial improvement in the GST regime. The GST e-portal system is getting stabilised through the introduction of e-invoices to claim hassle-free input tax credit by submission of online returns by suppliers and recipients of goods and services.
While the proposal to decriminalise the offences up to a threshold limit is a welcome step to protect genuine defaulters, there should be stringent ways to punish the errant either under GST laws or IPC.
Enemies of competition
Apropos ‘Dealing with marketplace bullies’ (November 2), the proverb ‘prevention is better than cure’ seems appropriate as far the Competition Commission of India is concerned.
The recent penalising of Google by CCI is an ex-post action. Proactive regulations will help tackle anti-competitive practices that affect consumer sovereignty. CCI must adopt a mechanism to identify anti-competitive activities early and nip themin the bud.
Green housing push
This refers to ‘Financing green housing’ (November 2). Indians as a rule are more price sensitive than others. Any rise in costs due to the initial rise in expenditure due to adoption of green measures will probably result in most units going unsold. Therefore, unless incentivised, builders going for the green model are going to be minimal.
Only government intervention can help. Concessional rates of interest on housing loans for such units would help. How energy efficient houses would entail savings in the long run need to emphasised. Energy costs will keep on increasing and a little bit more spent today will save much more tomorrow.