Are Rates Stressful or Are We Barking Up the Wrong Tree?

It will be worthwhile to consider RBI’s recent research highlighting the core type characteristics in high food inflation and its spillover effects on core inflation.

And lastly, the reason for persistently high food inflation despite record agriculture production (FY25 is projected to grow by 5%), much higher than the population growth of 1.1 per c

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So what is camouflaged by the robustness of corporate situation, and well capitalised banks is the persistently stressed Indian households whose income constitute 78 per cent of India’s GDP. The other dimension of this stress is that the burden of fiscal consolidation from a high level of public debt, estimated at ₹270 trillion or 90 per cent of GD

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Real private final consumption expenditure has been averaging at 3.5-4 per cent over the past five years despite the exuberant leveraged spending. And while the contraction in financial savings was seen as a sign of improving household confidence, it ironically accompanied a languid actual consumption, indicating faltering real incomes.

Indeed, the

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Distribution of individual income tax filers shows that average income growth from all sources, including salaries, business income, earnings from deposits etc. was a modest 5.6 per cent over the decade ending FY24, barely matching inflation. Earnings from equity markets for an average earner remains low at 5 per cent despite the robust expansion.

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