RBI hikes REPO rates

Image Source: www.ibnlive.in.com

RBI recently hiked the REPO rates and I was reading some articles on WSJ.com and LiveMint.com about the same. For those who don’t know what a REPO rate is, it is the rate at which RBI lends money to banks. Now this was done to curb the inflationary pressure that the economy is facing. This inflationary pressure is largely due to the rise in food and fuel prices. Now I fail to understand that after 64 years of independence, an agrarian economy still has basic problems like irrigation and storage. Governments after governments sing the songs that how far India has grown. But if the most important problem related to the most basic need i.e. food cannot managed, we should ask them are we really growing?

I understand that rising fuel prices is another cause of concern. But if that is so, why not improve public transportation facilities and encourage people to use them (Almost all Indian cities have a really bad and insufficient public transportation system in place). Why not discourage people from buying and using private vehicles by having more duties on buying and using cars? (Of course that cannot be done with so many automobile majors looking to set up shop in India, because of two reasons one India being a big market and secondly its geographical position for exporting cars).