India’s inflation problem: A novice’s perspective of understanding the shortcomings of the policies and measures implemented by RBI and Govt of India

India's headline annual rate of inflation, based on the monthly Wholesale Price Index (WPI), rose to 9.44 per cent for June 2011 as compared to 9.06 per cent for the previous month and 10.25 per cent in the corresponding month of last year. Provisional data released by the government showed that India's food inflation rate had risen to 8.31 per cent for the week ended July 2, 2011 from 7.61 per cent for the previous week. The inflation rate for fuel and power, however, eased further to 11.89 per cent from the previous week's level of 12.67 per cent.

Can microfinance be used as a macroeconomic tool to control inflation?

What is microfinance?

Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services such as credit, savings, insurance, and fund transfers.

Relevance of microfinance in Indian Context

RBI statistics show that 41 per cent of the adult population in the country is unbanked; that is, do not have a bank account.