Interviews
Reaching 'Tipping Point' for growth
07 Apr '07
3 min read
Tight selective measures are not unprecedented and would have been much more appropriate under the current circumstances. The other factor that the Central Bank may like to consider is that there is no harm in preparing the markets for its decisions in a manner that the element of surprise is reduced and unintended market reactions can be avoided, added the CII President.
The right prescription for containing inflation should focus on dealing with the supply side constraints, which are fuelling price rise and also price expectations. Monetary measures would fail to address this aspect and therefore, the propensity of inflation shooting up each time growth picks up would remain, even if short term rate hikes manage to bring WPI figures down, the CII President added.
While the supply side measures take effect, industry might have to accept in the short term, appreciation of the Rupee, even if it means that exports are hurt a bit. The CII President said that he is confident that industry would once again address issues of productivity and innovation to improve competitiveness in the face of adverse exchange rate.
This has to be supplemented by post harvest measures like quick build up of cold chain infrastructure and storage to avoid waste. This would mean that incentives would have to be created to shepherd investments in these areas. Over the medium term, agricultural productivity has to be increased to meet up with the ever-increasing demand, said the CII President.
Eventually, it is competition that is the panacea. Any effort at price management in the medium to long term would mean infusing greater competition, which is the natural valve against short term price rises, concluded the CII President.
The right prescription for containing inflation should focus on dealing with the supply side constraints, which are fuelling price rise and also price expectations. Monetary measures would fail to address this aspect and therefore, the propensity of inflation shooting up each time growth picks up would remain, even if short term rate hikes manage to bring WPI figures down, the CII President added.
While the supply side measures take effect, industry might have to accept in the short term, appreciation of the Rupee, even if it means that exports are hurt a bit. The CII President said that he is confident that industry would once again address issues of productivity and innovation to improve competitiveness in the face of adverse exchange rate.
This has to be supplemented by post harvest measures like quick build up of cold chain infrastructure and storage to avoid waste. This would mean that incentives would have to be created to shepherd investments in these areas. Over the medium term, agricultural productivity has to be increased to meet up with the ever-increasing demand, said the CII President.
Eventually, it is competition that is the panacea. Any effort at price management in the medium to long term would mean infusing greater competition, which is the natural valve against short term price rises, concluded the CII President.
Confederation of Indian Industry
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