Inflation is not growth.

The sudden drop of food inflation to 1.4% has already ignited calls for the RBI to reduce interest rates to stimulate growth. However, the RBI would do well to reflect long and hard before deciding. Firstly, this figure is partly due to a very high base and secondly, food prices are highly seasonal. Present prices reflect an abundant kharif crop due to generous monsoon rains but come spring the effect will start to wear off unless there is adequate rainfall for the rabi crop. Grains can be stored though, if past experience is any guide, a lot of it will rot on open ground because of lack of storage silos. Vegetables are perishable and as the season wears on winter vegetables will gradually disappear and prices will start to rise again. Large amounts of edible oil and pulses have to be imported and politicians have a big role to play in their procurement and prices. A report by Comptroller and Accountant General blames the Consumer Affairs and Distribution Ministry ( what country in the world wastes money on such a idiocy ) for a loss of Rs 12 billion on import of pulses between 2006-2011. TOI, December 29. Seems that the ministry allowed private traders to take control of imported pulses through a skewed tender system which allowed a few traders to submit bids far less than market rates. Also the ministry continued to import yellow peas even though there was no demand for it. Total loss Rs 12.01 billion. We are not told how the profits were distributed. The only reason why the government is so desperate for growth is that tax collections will increase which will mitigate the disastrous effects of unrestricted wasteful expenditure. Instead of reducing expenses the government wants to pass a Food Security bill which will mandate cheap grains, pulses and oil to 70% of the population. Expenses will balloon, inflation will jump, fiscal deficit will rocket, the rupee will dive and we will suffer as the economy tanks. One would think that with the World Famous Economist in charge the economy would be on a sound footing but he knows that the Great Successor is waiting to take over and he is calculating that he will be gone when the shit hits the fan. That anyone can be so selfish, mean and unpatriotic is hard to imagine. Pathetic.