The Reserve Bank of India hiked its key lending rates within 24 hours of the increase in petrol prices, thus making all kinds of loans costlier. The hike is a clear manifestation of the government’s mindset that it is least concerned about the issue of price rise and the resultant plight of the people. It is laughable that the key interest rates are hiked in the name of taming the runaway inflation after hiking petrol prices that would in fact give boost to price rise. The way the Reserve Bank has hiked interest rates for the 12th time since March 2010, it is amply clear that even the Central bank has no clues about the causes for the spiraling inflation. The fact that the RBI does not appreciate a simple logic of monetary policy having a limited impact in taming inflation is beyond comprehension. When it is amply clear that such measures are not enough in themselves, there should be no reason to further burden people who are already reeling under the sky-rocketing price rise. Ironically, such measures are being resorted to when the IIP figures have nosedived and the GDP growth rate is at its lowest over the last 18 months. It is but natural for the common man and the industry to be disappointed from the latest decision of the RBI. While the decision is bound to affect the IIP growth rates, it could also have an adverse impact on investment. Amid the prevailing apprehensions, it is difficult to accept that the government would be able to bring inflation under control.

There could be some substance in the assertion that the RBI is left with no other option than to hike interest rates, but what can be the rationale behind repeatedly using the same instrument when it has failed for at least a dozen of times. It is high time that the Central government comes up with something out of the box solution, or else it would become difficult for the policy makers to find solutions to the resultant economic problems. If the policy makers are of view that they can control inflation in the prevailing conditions just by tweaking the monetary policy, then it is time they realize the mistake. It is disappointing that the Central government, which has esteemed economic planners in its rank, is resorting to such measures which are in fact stoking price rise than taming it. The weakening of Rupee vis-à-vis Dollar was given as the justification to increase petrol prices. It is difficult to buy this argument because people have not forgotten the fact that petrol prices were hiked even when Rupee was in a stronger position. In that context it seems that the Central government has no idea of the factors behind the runaway inflation. In addition, it is doubtful whether the government has any inkling of the trauma which a common man is going through due to price rise. Had it been concerned about the plight of the people, the agenda of hiking LPG prices would not have been on its discussion table at a time when it gave a go ahead to hike in petrol prices. The decision on limiting the number of subsidized gas cylinders to each household might have been deferred, but such proposals manifest the insensitiveness of the government.