Government has no Magical Lamp

It happened one more time.

Yesterday, Finance Minister Pranab Mukharjee said, government has taken necessary steps to tame inflation, but it does not have Aladdin's Magical lamp to resolve things immediately.

• I remember him saying the same thing in early January 2011
• Last time, he indicated, the future course of action would be taken Reserve Bank
• RBI in line with general perception & growth pressure raised benchmark rates to moderate 25 basis points. And this moderate hike has not helped so far to bring down the inflation (read WPI and specifically essential commodity)
• Somehow, I think, RBI should take a preemptive steps in near future & tweak benchmark policy rates
• Hoarding of food commodity is raging off-and-on with different items, it started with 'daal', onion, now edible oils.
• The Indian Economy at large will have implied effect of radical changes happening in political sphere of Egypt

Inflation & RBI's quarterly review

The inflation numbers (CPI) touching record 18.3% in last week and the news that has come out today that petrol (i.e Motor Spirit MS) prices would be increased by approximately Rs. 2.50. SENSEX showing anxiety or discernment of trading market::

All eyes are on the RBI's Quarterly review scheduled on 25th Jan 2011.

And that recently all Indian big bankers visited RBI officials with an urge to reduce the CRR, SLR!!

And that the Finance Ministry going public and stated on record "we don't understand how inflation is moving now!!" It's the same ministry which has largely backed out 'from supporting' OMCs which running into RED. Who has also refused the Oil Ministry's request to increase HSD prices. There will not be any major surprise if the big-ticket/Mega IPO of IOCL gets postponed till next notice.

And that Agriculture minister Mr. Sharad Pawar accusing 'media' for baseless-ly increasing non-existent inflation (??)

What would happen to HSD prices? What . Duvvuri Subbarao would do?



-:Dhan