Economic growth through 'Ji Huzoor'.

India's "Retail inflation eased in November to 5.48%, lower than 6.21% in the previous month," as "Food inflation slowed down to 9.04% from 10.87% a month earlier." "The decline in inflation, together with a sharp fall in growth in the July to September quarter to a seven-quarter low, supports expectations of a rate cut in February when the monetary policy committee meets next." Reuters. "India's Gross Domestic Product (GDP) growth slowed down to 5.4% during the second quarter (Apr-Sept) of the financial year 2024-25 due to the falling growth rate in manufacturing, consumption and mining." HT. "Meanwhile, core inflation, which excludes food and fuel prices, stood at 3.9% in November 2024," while "industrial output rose to a three-month high of 3.5% year-on-year in October...driven by a boost in consumer durables and manufacturing during the festival season." Mint. On 10 December, "The Indian rupee slipped to a record low and government bond yields fell.., as the appointment of career bureaucrat Sanjay Malhotra as the next governor of the Reserve Bank of India (RBI) prompted traders to ramp up bets on rate cuts." Yesterday, "The rupee hit a low of 84.88 against the dollar before closing at 84.8575," as "The RBI has been routinely selling dollars in the spot market...to support the local currency as it has consistently hit new all-time lows." Mint. Every central bank faces a 'trilemma' which is 1. A fixed currency exchange rate, 2. Allowing capital to flow freely and 3. Autonomous monetary policy. Investopedia. India does not allow capital account convertibility, which means allowing conversion of any amount of rupees to any foreign currency, because that would lead to extreme volatility. CNBC. Hence, the RBI's governor faces a different trilemma - that of "balancing economic growth, inflation and exchange rate stability". "Rahul Bajoria, an economist with the Bank of America, highlighted RBI's 'three-body problem' as it navigates slowing growth, elevated inflation and exchange rate pressures." TOI. The main problem is inflation. The RBI has a mandate from the government to keep retail inflation at 4% with a margin of 2% on either side." ET. However, from 2014 to 2023 the RBI has been happy with inflation higher than 4% (RI), except for 2017, 2018 and 2019, when the average rate of inflation fell a little below 4% probably because India's GDP growth rate fell from 8.26% in 2016 to 3.87% in 2019, (Macrotrends) due to the demonetisation of Rs 1000 and Rs 500 notes in November 2016 (wikipedia). In the US, the consumer price index (CPI) inflation increased by 2.7% in November which was 0.1% higher than in October. Core CPI was at 3.3%. CNBC. While the US finds a rate of 2.7% intolerable, in India there is a raucous chorus for cutting interest rate even with an inflation rate of 5.48%. Higher inflation means that the value of the rupee keeps falling as the rupee buys less. One dollar was less than Rs 60 in May 2014 (Thomas Cook) when this government was first elected (wikipedia), but has risen to Rs 84.8575 yesterday. A weaker rupee increases the cost of imports and results in higher inflation which, in turn, reduces the value of the rupee. Donald Trump will be sworn in on 20 January. His victory caused the rupee to fall, so what effect his policies will have is not known. Mint. The new governor of the RBI will want to please his masters in government who totally believe in lower interest rates to increase economic growth. However, the economy cannot grow if people restrict spending due to rising prices. Ji huzoor can't support the rupee or control inflation. Please Dear Leader. Enough.