Rising wages offsetting inflation pinch: Subir Gokarn
the beginning of the year, it had pegged inflation at 6.5 per cent.
It can be noted that during the past five years, the flagship rural employment guarantee scheme has raised the bar for rural incomes.
Gokarn, however, said this wage increase, though good from the welfare point of view, has not helped the economy.
"If we see such wage increases, it is fantastic from a welfare/development point, but it has to be matched with productivity.
"We have to see that it is matched by proportionate increase in productivity which can help control inflation," he said, adding this has hurt the inflation situation as people have started to factor-in inflation.
"It starts to build inflation into people's bargain. This is what we are going to live with (is what the people think)," he said, adding that employers have also grown up to the idea of a 20 per cent jump in wages.
