With the fall in the inflation rate, an impression is made or created that now inflation has started coming down.
Whereas in reality it only means that the rate of inflation has come down.
That is, if this rate decreases from eight to seven percent in comparison to the previous month, it would mean that where the prices of things had increased by eight percent in the previous month, in the corresponding month it increased by seven percent.
That means inflation has increased again. That’s why the recent figures in India cannot be a reason for satisfaction in any way.
Then there is also the matter of seeing at what cost the fall in inflation (if it turns out to be sustainable).
The Reserve Bank of India, like other Central Banks of the world, has adopted the method of increasing the interest rate to control inflation.
One result of this is bound to come in the form of a decline in the rate of economic growth.
Now it will be seen whether the economic growth rate comes down below the inflation rate.
This is an indicator of trouble. Today the danger of stagflation is in almost all the countries of the world.
The experience so far is that raising interest rates has not brought down inflation in the proportion that was expected.
One reason for this is that the inflation this time is not actually due to excess of cash in the market.
Rather, this is also the result of the supply chain being badly affected. That’s why even reducing interest rates has not had much effect.
On the contrary, due to this policy, the burden of repaying loans has increased on the middle class, due to which there are clear signs of reduction in consumption.
It has affected the rate of industrial growth. This aspect has also contributed in creating the situation of stagflation.
It is another matter that the Government of India is not ready to accept the problem.