STRESS; REPO AND REVERSE REPO: DR SHRINIWAS KASHALIKAR

Repo rates are the rates of interest a bank has to pay to reserve bank, on the loan it takes from reserve bank.

Reverse repo rates are the rates of interest reserve bank pays to the bank on the deposit kept by a bank in the reserve bank.

In other words reserve bank increases repo and reverse repo rates to encourage deposits and discourage borrowing; by the banks; so that the cash flow to the consumers is reduced.

The increase in repo rates is expected to increase in the rates of interests on the loans given by the banks, reduction in cash flow, reduction in the demand and thus reduction in the prices that is inflation.

Can rate of inflation come down in this way?

By increasing repo and reverse repo; government is further reducing the little white money available to majority and we are being throttled, for buying of essential commodities. The producers of essential commodities suffer because; majority of them are also consumers of essential commodities, which they do not produce and NOW can not buy. The buyers and producers of the essential commodities such as agricultural products, bicycles, clothes etc. suffer in this way and the rate of production and hence the growth of all transactions of essential commodities; precipitously comes down.

But the rate of growth as documented in government files is not affected adversely because; the GDP is hardly reflected in the figures of industrial growth; because of the increasing production of the unnecessary and unaffordable (to majority of us) products, and increasing the sale of these products by owners of black money.

The availability of white money is reduced due to increasing repo and revere repo rates. But black money is freely flowing and hence those who have it; buy essential commodities at very high price (even if their production is reduced) and make life difficult for the majority and inflation of essential commodities continues!!

This is simply a sketch; the details can be filled by any realistic (holistic) and rational economist! But the way out is implementing holistic education, holistic health care and in fact holistic approach in every field.

When we say NAMASMARAN is a universal solution or panacea; we actually mean that it inspires holistic perspective, policies, plans and programs essential for holistic renaissance.