Humans by air and vegetables by train.

The Finance Minister recently hoped that the Reserve Bank would look at " all sides " while setting rates. If the minister was expressing support for the RBI in its fight against inflation then his opinion is welcome. If, however, this was a sly way of putting pressure on the RBI to reduce rates then he is no different to his predecessor who was ready to destroy the economy for a spurt of false growth to win the elections in May. This government has absolute majority in parliament and so should be taking tough decisions now so that they can reap the benefits of a growing economy by the time the next elections come round in 2019. This will not happen unless inflation is controlled. Why are politicians in India so keen to protect borrowers, the vast majority of whom are rich, when they should be protecting vulnerable savers, such as pensioners? The glib answer is that if companies can borrow cheaply that will encourage new projects which will stimulate growth and increase job creation. The true answer is that the government is the largest borrower and wants to continue its wasteful spending without consequence. The nagging fear is a collapse of the humongous property price bubble just waiting for a pin. Fortunately the RBI has kept interest rates on hold but cut the Statutory Liquidity Ratio by 50 basis points to free up more cash for banks to lend. The proof of its wisdom was realised when the Consumer Price Index in July came in at 7.96% compared to 7.46% in June. Factory output growth fell to 3.4% in June from 5% in May and growth in manufacturing slowed to 1.8% in June from 5.1% in May. Vegetable prices increased by 37% from June to July, tomato price increased by 80% in one month. By decreasing the value of money inflation reduces the value of our savings while prices of assets such as properties, stocks and gold rise. So inflation acts as a transfer of wealth from the poor to the rich. Politicians don't care because they are very wealthy and inflation proof, because everything is paid for by the taxpayer. Inflation in the cost of services, such as healthcare, transport and education, which are essential, is even higher than in merchandise, which is killing the middle class. However, there maybe some inadvertent good news. Seems that the Minister of Civil Aviation is keen on building new airports in every city. It is much cheaper to build an airport than to build new railway tracks. If charges are kept low most passengers will opt for air travel. The government should then use rail tracks for the high speed movement of goods, like Rajdhani trains. At present vegetables are transported by trucks and, being perishable, cannot be transported over long distances. Air conditioned trains will be able to cover the country overnight. By transporting from high output areas to high demand areas costs will be reduced while farmers will gain. Bring retail inflation down to 3% and no one can defeat you.