How is 9 per cent growth contributing to the inflation rate?
When demand increases and supply does not match it, prices increase. But I don't think the current high inflation is entirely due to India's growth rate. This inflation is due to the high food grain and oil prices in the international market, and due to our inability to increase the supply of foodgrains.
We have now realised how important and basic is food security. We were talking about it since quite sometime. The neo-liberals would ask, 'why do you want to build food stock, why not grow orchids if it gives you more money than rice?' They argue that at any point in time, you can import.
But people like me say that we cannot depend on the vagaries of international market for essential foodgrains. We must have a buffer stock and we must play in the market. We do have confidence in the market, but it requires regulation and intervention. And we must have the capacity to play.
Image: A bank employee counts currency notes in Mumbai. | Photograph: Indranil Mukherjee/AFP/Getty Images
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