The impregnable shield of DA.

"Retail inflation in India surged to 7.79% on an annual basis in the month of April owing to higher edible oil & and fuel prices, data from Ministry of Statistics and Programme Implementation showed on Thursday (12 May)," ET. "Analysts had expected the CPI inflation to be around 7.5%, up from 6.95% in the month of March & 4.23% in April 2021." Right on cue, "India's growth rate is likely to slow if the central bank hikes interest rates, Finance Secretary TV Somanathan told CNBC TV18 on Thursday," ET. He need not worry. The present Governor of the Reserve Bank (RBI) Shaktikanta Das was a brother officer as Union Revenue Secretary and Joint Secretary Department of Expenditure, Ministry of Finance, wikipedia. He was smiling at rising inflation even as he clamped interest rate at 4% for the 11th time in a row as late as 8 April 2022, BT. And looked reluctant as he raised interest rate by a cute 40 basis points on 4 May 2022 in an off-cycle        (emergency) meeting of the Monetary Policy Committee (MPC), ET. "The Federal Reserve on Wednesday (4 May) raised its benchmark interest rate by half a percentage point, the most aggressive step yet in its fight against a 40-year high in inflation," CNBC. Since Washington is about 10 hours behind Mumbai the RBI's action was clearly timed to be as late as possible. However, there is no respite. "The US Senate...confirmed Jerome Powell to a second four-year term as head of the Federal Reserve," and, "Powell signaled at a news conference after that announcement that more rate hikes of that size are likely at the next couple of Fed policy meetings," Reuters. Rising rates in the US strengthen the dollar. "After hurtling past the 77/$1 in trade today (9 May), the rupee weakened further versus the US dollar, hitting fresh all-time low of 77.58/$1," ET. "Weakness in domestic equities also pulled down the rupee, dealers said." "So given that inflation is already very high and the RBI has been quite late to play catch up as far as raising interest rates to tackle inflation is concerned, going forward the outlook is not too good for the Indian rupee," said Mythili Bhusnurmath. Instead of raising rates the RBI is trying to keep the rupee stronger by selling dollars, NDTV, because a stronger rupee lowers cost of imports and thus controls inflation. Why is the RBI gambling with our foreign reserves? Because, "For starters, inflation, in moderate doses, is a great aid to the government expanding fiscal intervention amid economic sluggishness," wrote Somnath Mukherjee. Gobbledygook? It means that the higher the prices the higher the tax collections as GST collection in April hit a record Rs 1.68 trillion, moneycontrol. Who suffers from inflation? The recently released National Family Health Survey (NFHS 5) "has found that 89 percent of children between the formative ages of 6-23 months do not receive a 'minimum acceptable diet'," TIE. Government employees are protected. Dearness (inflation) Allowance (DA) is to be increased to 38% of basic salary, News18. So, who cares?