Key Points
Amid rising debate over how to handle India's persistent food inflation, Raghuram Rajan, former Reserve Bank of India (RBI) Governor, has cautioned against excluding food prices from inflation calculations..
As inflation remains a key concern for the central bank, Rajan's stance is that removing food inflation from headline inflation targets could erode public's 'great faith' in the central bank's ability to manage the broader economic picture...
"So, if you leave out some of the most important parts of inflation and tell them, inflation is under control, but food prices are going through the roof... they would not have great faith in the Reserve Bank," Rajan told PTI in an inerview...
"You cannot affect food prices in the short run, but if food prices stay high for a long time, that does imply there are constraints on producing food relative to the demand," Rajan told PTI, adding that central banks can address inflation in other areas to balance these pressures...
While inflation in other sectors is more controlled, food prices have remained elevated, with staples like vegetables and pulses contributing significantly to the overall rise.. The Indian government has implemented various measures to combat high food inflation, including selling vegetables and pulses at reduced prices, imposing stock limits, and restricting exports..
