Releasing the annual report of 2009-10, the reserve bank has made it clear that growth in agriculture sector and more efficient distribution of food-grains are paramount factors to contain the rising inflation as well as the inflationary pressure.
RBI release says “ Repeated supply(food-grains) shocks poses a constant challenge to ensuring a low inflation regime in India, which is necessary for achieving inclusive growth.A medium-term approach is required to augment the supply by addressing structural supply constraints, particularly in items of mass consumption”. Also the report at one stage observes that when the inflationary pressures are dominated by adverse supply shocks, “monetary policy could be less effective in containing inflation”.The report puts attention on agricultural productivity and the need to have a monitoring mechanism for the futures market despite the prevailing ambiguity about the relationship between the futures market activities and the spot prices of commodities.
RBI release says “ Repeated supply(food-grains) shocks poses a constant challenge to ensuring a low inflation regime in India, which is necessary for achieving inclusive growth.A medium-term approach is required to augment the supply by addressing structural supply constraints, particularly in items of mass consumption”. Also the report at one stage observes that when the inflationary pressures are dominated by adverse supply shocks, “monetary policy could be less effective in containing inflation”.The report puts attention on agricultural productivity and the need to have a monitoring mechanism for the futures market despite the prevailing ambiguity about the relationship between the futures market activities and the spot prices of commodities.
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