How not to tackle a hole.

"Reserve Bank of India (RBI) Governor Sanjay Malhotra said he would prefer greater clarity on the persistence and trajectory of inflation before considering any recalibration of the policy rate, while warning that a broad-based rise in food, fuel and input prices could warrant monetary tightening." ET. "When we say inflation has come down from, say, 6% to 2%, it means the rate of change of prices has come down. But prices are still going up." "There exists a school which always argues that inflation is low; even when high it is not a concern; and, as a corollary, interest rates should be lowered," wrote Madan Sabnavis. Inflation compounds every year which is what consumers feel when they shop. "This fiscal year, inflation has averaged 3.9% in the first quarter, but perception of inflation was 7.7%." And so, "Companies have often said in their investor presentations that demand has been affected by inflation; that higher food bills have left less money for discretionary consumption." In March, "India's federal government...retained its retail inflation target at 4%, within a comfort band of 2%-6%," for the next five years. Reuters. In February, the base year for Consumer Price Index (CPI) inflation was revised from 2012 to 2024 using the Household Consumer Expenditure Survey 2023-24. The weights of various items in the CPI basket changed. Weight of food and beverages decreased from 42.617 in 2012 to 36.753 in 2024, housing, water, electricity, gas and other fuels increased from 16.888 to 17.665, while transport increased from 6.394 to 8.796. pib.gov.in. In its meeting on 5 August, the Monetary Policy Committee (MPC) of the RBI held its interest rate at 5.25% (Reuters) while "After considering all factors, CPI inflation for 2026-27 is projected to be 5.0% with Q2 (July-September) at 4.7%; Q3 at 5.9% and Q4 at 5.5%," said Malhotra. "In August, the growth estimate for this fiscal year has been upped, yes upped to 6.7%, while the inflation estimate has been lowered a tad, from 5.1% to 5%." "Apart from the fact that the MPC's estimates need to be taken with a huge pinch of salt, given the heightened external risks, a repo rate of 5.25%, implies a negative real rate of interest for the next three quarters." "Part of the reason might be the MPC's apparent belief that core inflation matters more than headline. The term 'core inflation' (excluding food and fuel) was mentioned eight times in Gov. Malhotra's Statement," wrote Mythili Bhusnurmath. "The interest question, then, is not whether RBI should have raised rates. The more revealing question is why almost nobody expected it to." "Over time a fairly settled view of the RBI has emerged. It is widely seen as an institution that prefers to wait rather than tighten policy unless inflation becomes impossible to ignore or external developments leave it little room for manoeuvre." That reputation "has been accumulating for several years," wrote Puja Mehra. Since food and beverages have the biggest weight in the CPI basket, the retail price of food depends on supply and a higher interest rate will not increase supplies, is the reason for paralysis. What is conveniently forgotten is that food, especially perishable fruits and vegetables, are transported by trucks from farms to mandis (wholesale markets) in cities which have to pay toll multiple times during the journey. "At the Shahjahanpur Plaza, for instance, the one-way toll is...Rs 665 for a bus or truck and more than Rs 1,000 for vehicles with four or more axles." Mint. The price of diesel used by trucks has also jumped in recent weeks. noewsonair.gov.in. High inflation helps the government by reducing debt (economic help) and low interest allows the government to borrow cheaply. The RBI is trying to help the government but the economy depends on what people earn and spend their money on. What do they say about holes (wikipedia)? Just obeying orders. May be.