The effects of Pushmepullyou economic policies.

"Concerns over persistently high inflation dominated discussions at the Reserve Bank of India's (RBI) monetary policy committee (MPC) 4-6 August meeting that kept policy rates unchanged, minutes released on Thursday showed." RBI Governor Shaktikanta Das would like to give some more time "for the cumulative 250 points reduction in policy rate since February 2019 to seep into the financial system and further reduce interest rates and spreads". Maybe it is the seeping that is causing the rise in inflation. "The inflation generating process (IGP) is poorly understood everywhere," wrote VANageswaran. "For developing countries like India, food prices are an important part of IGP." Higher inflation will stimulate growth, he says. RBI showed inflation expectation of households has increased. "Three-month and one-year ahead median inflation expectations rose by 190 and 120 basis points, respectively, over the previous round," the RBI said. High food prices are good for farmers who get higher returns for their produce. "India cannot achieve 9-10 percent growth without revolution in the farm sector Niti Aaoyog CEO Amitabh Kant said." Because, although agriculture contributes just over 17% to the GDP, it provides jobs to 53% of the population in India. So, on the one hand, the government raises support prices of crops whose prices have crashed due to bumper production, while on the other, it imported tur dal last year in June and 100,000 tonnes of onions in November to cool retail prices. "India has now reached a stage in which surplus management has become a major challenge. We need to move now to policy strategies that ensure sustained farmers' income alongside reasonable food prices for consumers," Das said. Surplus is generated by the policy of minimum support price, which means government buying articles of food at prices higher than the market price. Consumption of food in India is lower than international standards so higher consumption could push prices up, wrote Roshan Kishore. One way of keeping a lid on inflation would be let the rupee appreciate against the dollar which will bring down the cost of imports. Total imports in 2019-20 was estimated at $598.61 billion, so a stronger rupee will cool prices. Instead the RBI has been buying dollars, higher than all the central banks in Asia, which weakens the rupee. India's foreign exchange reserves soared to a record $538.191 billion before dropping slightly to $535.252 billion in the week ending 14 August. The government could reduce prices by reducing transport costs by passing some of the fall in the international price of oil to consumers, but that would add to the fiscal deficit which is already threatening to explode out of control. Contradictory policies by the government and the RBI means that the last consumption survey conducted in 2017-18 "showed a decline in consumption expenditure in rural areas while it barely increased in urban areas. The net result was a rise in overall poverty." Dr Dolittle's Pushmepullyou was meant for children. Not meant for economic policies.