The RBI has hiked rates as many as thirteen times so far.In spite of this inflation is mounting and food inflation has soared to12.27 er cent for the week ended 22nd October 2011 Head line inflation in September 20011 stood at 9.27per cent..Inflation has spread even to the manufacturing sector.This clearly shows that RBI's rate hikes are not workiing
In view of this RBI must adopt selective credit controls in lieu of repeated rate hikes that affects all sectors and all sections of people including most vulnerable ones..Rate hikes have compelled producers and manufacturers to defer their expansion plans and as result supplies will be affected.Supplies may not increase as required.Hence the government must adopt suitable fiscal policies to curb inflation instead of repeated rate hikes that affect production and expansion of manufacturing activities.
