Inflation over Unemployment...

Indian economy is not demand constrained, it is supply constrained. There is absolutely no doubt about the growth potential... the doubt is about when... when we would be able to reduce the interest rates... And, that will happen when inflation comes down to our target (5%)... The government should aim at removing supply side bottle necks and the RBI should take care of the finances by reducing interest rates... The stock market in INDIA is very responsive, it is responding on all the relevant information. It is active... We in INDIA have subdued the demand pressure by not reducing interest rates... Industry is waiting for rate-cuts so that they can resume (investment) spending... But after the September rate hike the Industry is worried about another such action from the RBI considering high inflation (food and fuel)… It is also expected because lower prices is a relief for all, especially food and oil prices, and when we lower prices by increasing interest rates it is also good for investment… our savings and yield on savings increase… we become richer… Therefore, it is in the interest of the economy to lower prices by increasing interest rates…  An inflation rate of (above) 10% is enough for invoking monetary policy action… We can easily expect another rate hike in the October review. We in INDIA are over-employed we are working longer hours and are paid less than our developed country counterparts. “INDIA IS OVER-EMPLOYED” not unemployed. Unemployment is not a problem therefore we need to look at inflation…