India is expecting food inflation rates to rise by 8.96%, but is hoping that the monsoons will allow the rate to come down by 6.5% by March 2012.

However, if the rates continue to soar, the RBI will not change its policy. The Chairman of Prime Minister’s Economic Advisory Council, C. Rangarajan has warned the Indian Institute of Managements (IIM) that there taking autonomy for granted. He stated: “Do not take this for granted. It is not often that the government takes such a decision”.

The IIM still has a lot of autonomy to achieve and there have been discussions about the point of ‘academic freedom’. Rangarajan explains that inflation will continue to be high for some more time. But the arrival of monsoons will make inflation come down.

The Reserve Bank of India is not responsible for inflation and cannot control it. The government is considered to be two-fold. “One is to keep the fiscal deficit low so that it does not add to demands pressures…Second is the role of the government in terms of intervention in the food grain market….it is not more than an increase 2-3%”. Rangarjan explains.