Friday, June 18, 2010

Inflation In India Crosses Double Figures

From 9.59% in the month of April 2010, the Inflationary Trend in India touched 10.16% in May 2010.The Economists are of the opinion that the rising foodstuff & metal prices account for this upward trend. The Deputy Chairman of the Planning Commission, Mr. Montek Singh Alhuwalia remarked that the Reserve Bank of India should take steps to curb the rising inflationary trend.

The price of foodstuffs increased 16.49% in the month of May 2010.The price of wooden articles increased due to an increase in the price of commercial plywood. The prices of metals increased by 3.4%, stainless steel by 26%, steel plates & strips by 14%. The price of tea increased by 21%.

On 27.07.2010, the RBI will publish the monetary Policy Report. In that the RBI may state the measures to be taken to curb rising inflationary trends. In April 2010, the Industrial Products increased by 17.6%. Mr C.Rangarajan, Chairman of the Financial Advisory Committee to the Prime Minister, commented last week that the RBI should keep an eye on the rising inflationary trends and should not be content with the rising Industrial Products.Mr. Alhuwalia remarked that he fully agrees with Mr. Rangarajan.Mr. Alhuwalia further remarked that at the close of the year the inflationary trend would come down. The Prime Minister Mr. Manmohan Singh is also of the opinion that the inflationary trend will touch 5%-6% towards the close of the year. Mr. Kaushik Basu, Chief Financial Advisor to the Govt. of India, feels that, if the prices of Fuel are kept out of the Government Regulation, the inflationary trend will at first be on the rise but will come down within 6 months.

Contributed By:
Prof. Jayanta Mitra
(Globsyn Business School)