Should Subbarao now build warehouses?

It's not the RBI Governor who should direct building warehouses. Let him concentrate on restricting the currency availability either by interest-rate cut or by enhancing the same. But, of late, the action of RBI Governor doesn't give any impact in the economy primarily because the quantum of black money and fake money in the circulation is enormous. Just for an example, 3 days before, in Bellary about 300 jute bags (goonies) of destroyed currencies (of 100 & 500 notes) was found abandoned near a Saw Mill. Probably it is assumed this was the act of those black money holders of Bellary Mining jargons who seems to be escaped from the hands of investigating CBI officers. In fact, such incidents are quite often happening in these days. But the Government as well as the authorities are not taking adequate measures to curtail it only because those who are in behind scenes are socially influenced people. To be more clear, it is high time than to say it out, the official money circulated among the general public is lesser than the fake & black money currencies available in public. In such a situation, if the Government started printing more official currencies, do you think, the problem will be solved? Nor, would you think the RBI exercises on Interest-rate cut/ increase would solve the problem? Definitely not, instead this will make the situation more complicated and things will lead from bad to worse. In my frank opinion, our elected members should come forward and save our agricultural land and our farmers there by increase our natural productivity. They should build more good roads and infrastructural facilities in rural villages. They should build more warehouse to store these food grains and also maintain very efficient distribution system so that the needy gets his livelihood!

Recently Dr. Duvvuri Subba Rao addressed a gathering at Administrative staff college, Hyderabad and clearly expressed his views of not reducing interest rates in the wake of positive inflationary trends as lakhs of middle income group are depending on interest income. Reducing interest rates will definitely dent their purchasing power and lower their standard of life.

The government is under pressure from Industrialists to lower the interest rates & naturally Govt. is bowing to their demand & putting pressure on RBI to do so.

We have still a long way to go in developing a full proof infra structure to match with developed countries as they will ensure us better storage of food grains, better movability of vehicles with out traffic congestion which is eating away of our precious Forex exchange in way of high fuel bill.

When will our Government wake up to these issues?

Sai Babu

Really, the time has come for building warehouses for the grains. I am sure the cost of building of warehouses warehouses will definitely be lower than the amount we are lossing by allowing the grain to deteriorate.

At least we have one institution which is supposed to act with its head in the right place and not through its mouth (a la politician) and the countrymen can only hope that the RBI is allowed to do it's job honestly & independently. Controls have no place in a dynamic economic situation & decontrol of supply bottlenecks will have to go hand-in-hand with the lowering of interest rates. It has to be a concerted and joint action of both the govt & the RBI. Just lowering of interest rates is not going to bring down the interest rates.

yes building store houses would indeed be a good solution to preserve food grains. Nabard can give subsidy to farmers for constructing such store houses.The money they save from preserving food grains can be used for servicing the loan.There will more jobs, asset creation and active resistance to inflation on account of more supply.It should spread in all districts Taluks and Towns.
Taxing of rich is not the solution.NO body earns to pay for the convenience of others even if it happens to be the Government of the land.The Governments should be more responsible and learn to spend wisely for serving the people who pay taxes.It is time Zero budgeting is adopted and all the wasteful schemes are dumped in the dust bin.Even the Government servants should be made aware to earn their living by being useful to the society and not indifferent Babus.Lowering of interest rates is certainly not advisable as the inflation is already eating into hard earned savings of people and a time may come when people will rather spend than save

It is shocking that year after year precious food grains are allowed to rot.That too in poor country where 50 5 of population don't get 2 square meals a day.What is wrong with us all .The solution is simple and is a fraction as compared to the wastage in holding ,say commonwealth games.And what does our precious agricultural minister do,that is apart from getting slapped?Nothing .may be he is making his money in allowing the grains to rot .Who knows how much really rots and how much makes its way into the market?Shame on us all.

There are very few institutions left in India where the technocrats/bureaucrats are allowed to run independently w/o interference from their political masters.

RBI is one them.

The Governor should follow his own diktat rather then listening to the Govt's plea of lowering the interest rate.

The inflation has been stoked due to govt spendthrift policies pouring money in all non productive sectors like waiving off farmer's debt just before the last Lok Sabha elections in 2009(Rs.70,000 Crores) ,NREGA (Rs.50,000 Crores annually),Sixth Pay Commission {Rs.30000 Crores per annum).Unfortunately many of such expenses are recurring in nature.

And none of them has any co-relation with RBI interest rates.

Hence the arguement of Dr.Subba Rao that by keeping the interest rates high he will control the inflation does not really hold.

By reducing the interest rates at least he can spur the economic growth and the common man can counter the inflation bu higher wages/profits.

Of course YES! Because he is supposed to keep economy running. The
Govt mean politicians r 2 keep their Chairs,and of course their
cuts and what not, The industrialists to keep their margins - not
cos balance sheet, poor Janata to keep their Belts tightened. If
the food grains rot so what! Our Agri Minister and his home state
can start more breweries so people can drink the hooch and forget
everything. Long live this Democracy to hypocracy.

RBI should lower interest rates by 200 basis points.The inflation in India is entirely due to high global commodity prices and the weak Rupee. Neither of these factors can be changed by high interest rates. The RBI has shot down the Indian economy by its senseless actions which could not possibly have helped to reduce inflation. They ignored all warnings. Global commodity prices have started falling and will fall even more in due course. Lower interest rates will help the stock market. And this will encourage capital flows into India. A stronger Rupee will bring down inflation. Whereas persisting with high interest rates will block capital inflows which will aggravate inflation. The RBI made the same mistake in 2008 and lowered interest rates far too late instead of reacting to falling global commodity prices. Let it not repeat that disaster.