Indian economy is growing at a good pace at the moment.Same is true for inflation too.RBI is increasing key rates(repo and reverse repo) to curb inflation.But is that a right strategy?
Here comes the Big Picture.
The eleventh five year plan focuses only on industrial sector as income is medium and jobs are more.The approach is correct up to certain extent to make our economy an inclusive one.But not focusing on R&D in agriculture sector is a big problem.This is so because increasing key rates by RBI will do little to curb food inflation.
Pulses are touching an all time high of Rs.100/kg.Depending only on monsoons is not a right tactic.Intensive research is required to produce pulses of good quality and quantity.
Same holds true for fruits and vegetables.But in that case focus should be more on reducing the wastage,wastage that takes place when vegetables and fruits are being transported from filed to market.Government alone can't establish such effective supply chain.So,private national and international players should be allowed to establish these links.
In a country where 22-23% population is living below poverty line,such high food inflation is bound to cause malnutrition in younger generation.Government should take the right approach by starting R&D in agriculture sector and establishing proper public distribution systems(and monitoring them also) to curb this peril.
