New Delhi: Ahead of the crucial monetary policy review on Tuesday, the Reserve Bank of India on Monday discarded reports that inflation has taken a toll over the purchasing power of the poor. The Central Bank refused to accept any changes in the purchasing power of the people with growing inflation.

Slamming reports of decline in the purchasing power of poor, RBI on Tuesday credited Centre’s MNREGA scheme for uplifting the masses and enhancing their income. However, they agreed that an imbalance in the food supply and increasing income can lead to unfortunate results.

The RBI officials also mentioned that an increase in MNREGA wages with rising inflation can add to the burden of poor sometimes. Explaining it further they said that with the increase in their wages, inflation also tends to increase but less supply of foodgrains can mar the situation of the poor.

Hence, there is a need to maintain the elasticity of demand and supply of foodgrains in market to equal the balance.

Giving reference of the National Sample Survey Organisation's (NSSO's) survey, RBI informed that in contradiction the purchasing power of poor people have augmented with the rising inflation.

Though, it may be noted that Prime Minister’s Advisory Council held MNREGA responsible for the rising inflation in country.

Notably, facing the pinch of high inflation, the Reserve Bank of India is likely to raise the key interest rates by another 0.25 percent in its first quarterly review of monetary policy 2011-12 on Tuesday.

JPN/Bureau