Next year India is expected to hit the double-digit GDP growth and that is also going to be the best performance in last 18 years.
Just one word for it ………Incredible!!!!!!!!!!!!!
We don’t hesitate in making big statement, “India may top China’s GDP growth in 2007â€. Taking a step further our growth rate is compared to China. But we never bother to take a look at the inflation rate of China. While we are struggling with an inflation rate close to 7%, the same is below 2% in China. To be very precise it is mere 1.4 % in China. A good economy is one, which can maintain the pace of GDP growth and at the same time keep the inflation rate low. There is nothing to boast in achieving a steady growth with a hit of inflation.
India’s growth story may come to a standstill if the inflation rate is not brought under control. Currently our inflation rate is at two year’s high that is 6.58% and is defying all forecast. Due to increasing purchasing power, demand is surging and the same is pushing the prices.
In such a scenario, the dual role of our Finance Minister and RBI will be to control the inflation and maintain same rate of economic growth. Indians are spending like anything and there is an urgent need to encourage savings and also to manage supply constraints. Relaxation in loans and decrease in savings is pumping money in the market, which is resulting in cash outflows in consumption & Securities market (indirectly). This vicious circle needs to be controlled before it becomes a bubble. RBI had already raised the REPO rate and CRR in Dec ’06 to control the inflation. A further tighter action may be taken in the Annual Policy Statement in April ‘07.In order to control purchasing power and encourage savings moves are expected in Fiscal and Monetary Policy.
This is a normal economic phenomena that inflation rate is supposed to go up if GDP growth is also increasing. We can never have a win – win situation on both sides. The credibility lies in maintaining a balance between both. We do not need to panic as our Finance Minister, Mr. P Chidambaram has assured that he is closely monitoring the inflation and will bring it under control as he had done in the past.
Popularity: 1% [?]
I agree the a little bit of inflation is very much required in a growing economy but an inflation rate of as high as 7 % is way bit too much!!!!! That needs to be monitored very closely and our honourable FM should definitely think bout means and ways of controlling. Is any body listening???