Corona, Russia-Ukraine war and now the proposed global recession will prove to be a challenge for India

- Thus it does not seem practical to base monetary policy on consumption and fuel prices without identifying the real inflationary pressures in the economy.

- It is difficult to get a true measure of inflation in a country as there is a wide difference in the measurement of inflation between WPI and CPI.

In view of the ever-increasing inflation in the country, the government and other regulatory bodies are taking measures like changes in import-export duties, export controls, interest rate hikes, however, after a three-month decline, retail inflation in August rebounded to as high as seven percent, worrying policymakers. has increased. Estimates of India's economic growth rate are being reduced by various rating agencies on the assumption that inflation will be a drag on the country's economic growth rate. Higher food prices are said to be responsible for the high inflation in August. Foodgrain prices rose in August due to the uncertainty of rains in the current year's monsoon. In August, the price of pulses increased by 9.57 percent while the price of vegetables increased by 13 percent.

High food prices affect the purchasing power of consumers. Income is not increasing according to food inflation, which is directly affecting demand. Considering the relatively high crude oil prices, retail inflation is expected to remain high for some time yet.

This does not bode well for any country struggling to keep inflation low. If the increase in the price of pulses is not checked, it may create a serious problem.

As prices of vegetables fluctuate seasonally, their high prices are not as alarming as pulses. Prices of vegetables will come down significantly in the coming months, while the high prices of food grains and pulses are doubtful to come down immediately. The gap between demand and supply of pulses remains difficult to meet even through imports as very few countries in the world cultivate pulses which are in demand in India. The country cannot afford to depend on imports for long to meet its demand for pulses. Another concern from the inflation perspective in the country is the higher inflation prevailing in rural than urban areas. In the country, for example, pulses are cultivated more in the rural areas than in the cities, yet rural people have to pay higher overall prices for the commodity than urban people.

RBI's objective is to control commodity prices. But despite several measures, it has not been able to keep inflation around the target level of four percent with a band of two to six percent. Foodstuffs have a high weightage in CPI-based inflation, hence fluctuations in food prices have a major impact on CPI-based inflation. Food prices in our country especially vegetable prices fluctuate seasonally while fuel prices are driven by the international prices of petrol-diesel. Thus, without identifying the real inflationary pressures in the economy, it does not seem practical to base monetary policy on consumption and fuel prices.

It is difficult to get a true measure of how much inflation is prevailing in a country as there is a wide difference in the criteria used to report inflation in both WPI and CPI. The government may be seen to be more responsible than the traders for the inflation or in plain words the high price of food grains in the country. Considering the fact that the minimum support price influences the price of pulses, the government has put aside political expediency while fixing the minimum support price. Adoption of the policy. In many states, apart from the central government, the state governments themselves also announce the bonus prices of support, behind which only political gains and votebank points are calculated. Support prices keep open market prices high, which has a direct impact on food inflation. In such a situation, it is a matter of discussion and study how appropriate it is to base inflation on monetary policy by RBI.

Food inflation can be controlled by increasing production of food grains and pulses but increasing production cannot be the only weapon. It is also essential that foodgrain prices remain low along with the increase in production. Keeping inflation under control should be the main goal of the policy makers but it is also a fact that measures like increase in interest rate while chasing it based on consumer price index ultimately hampers the growth of the country's economy. High inflation is becoming a problem not only in India but also in the whole world and most of the countries are adopting the policy of increasing the interest rate. Given the aggressive increase in interest rates and the signs of a global economic slowdown in the coming year, it will be interesting to see how true the claims are that India's fundamentals are strong despite the Corona, Russia-Ukraine war.