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Govt must contain inflation
Not to speak of the US and the Eurozone nations, the Indian economy, too, seems to have been passing through a difficult phase. Double-digit inflation, the falling growth rate, disinterest of foreign investors in India, rapid depreciation of the rupee against the American dollar, the virtual failure of the monetary policy so far pursued by the RBI to curb the deteriorating trend and, above all, the surprisingly indifferent attitude of the government, conveniently shifting the blame for the current worrisome situation to the global environment, surely indicate that the country is headed for large-scale unemployment and general unrest. To stall the rapid depreciation of the rupee, the government could probably impose a complete ban on the import of gold at least for the time being. It could also reduce to some extent the import of crude oil and introduce rationing of petrol and diesel to be used by individual vehicle users. Automobile companies could be persuaded not to import components till the situation improved. Domestic investors should be guided to abstain from investing in foreign as well as domestic equities so far as the flight of foreign capital from the economy continues. The RBI could use a limited amount of foreign exchange to purchase the rupee in the open market. Serious efforts should be made to earn more and more dollars through the export of Indian goods to the markets other than the US and the Eurozone. To fight inflation, the government should possibly try to find ways and means to stabilise the prices of petroleum products (curtail duties). There is nothing wrong in the RBI’s monetary policy of raising the interest rate. Its effectiveness seems to have been hampered by the ill-conceived taxation policy. So long as the rate of inflation remains higher than the rate of interest on bank deposits, total interest earnings should logically be exempt from income tax. This would make bank deposits more attractive for those who otherwise prefer to invest in gold, silver, etc, or increase their expenditure on consumption. Higher bank deposits could certainly increase the credit creating capacity of commercial banks at a lower rate of interest for industry, a higher repo rate of the RBI notwithstanding. This could ultimately lead to a reduction in the cost of industrial output as also a higher economic growth rate. D N Tandon, Panchkula
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Time for poll pacts All political parties have girded up their loins with the assembly elections approaching fast. Their leaders are busy in making alliances with like-minded parties. It is a wise step to go in for coalitions, as the election scenario has changed quite a bit now. The BSP is harping on its old song, “We will go it alone in the coming election.” It has not learnt any lessons from the previous elections. In Punjab, the BSP is considered a party of the Dalits. By going it alone in the state, the BSP is cheating its supporters. BANSI RAM, Hoshiarpur Soldiers deserve respect
This refers to the news-item, “Army inches closer to change the way it goes to battle” (December 6). It was heartening to see President Pratibha Patil donning military fatigues and riding a T-90 tank during an Army exercise called “Sudarshan Shakti” in the Barmer sector. The Supreme Commander of the armed forces flew in a combat aircraft,
Sukhoi, reviewed the naval fleet of over 80 ships from the sea. Men in uniform have all the reasons to be proud of this morale-boosting by the lady President. This should send a clear message to politicians, bureaucrats and civil society to treat the soldier with respect and dignity as he guards national honour and sovereignty of the country. Col R D SINGH, Ambala
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