Article;
http://economictimes.indiatimes.com/news/economy/indicators/breaking-4-week-trend-food-inflation-up-at-855/articleshow/8595444.cms
Comment;
Inflation in fuel can be seen affecting prices of other essential commodities. Low stock and exploration of new sources of fuels, be it oil or gas, is putting pressure on prices to swell to food items. Exploration of oil and gas within INDIA in the short-run is difficult to achieve and effect of these on prices can only be seen in the long-run, 5-10 years ahead. During the short-run INDIA can take help of oil-producing countries to import their products. But, for this they need foreign currency reserves which they have accumulated during good seasons. Food inflation is declining but they can not remain unaffected by surge in fuel prices. Fuel prices can be seen to be constant for more than a year, they are neither increasing or decreasing. One interpretation of this trend could be bad management of the affairs, but, if the government has foreign currency reserve the when they are going to use it. We do not need food to be bought with that money we need price-stability and fuel prices are affecting that crucial variable. Opening imports and letting the Indian currency appreciate is another way around, which means cheaper imports and would also help in reducing our international-trade-deficit. I have heard about taking 25 paise out of circulation but that would mean a depreciating Indian currency. At this time when inflation is a major concern for liquidity to the industrial sector opening imports and letting the currency appreciate can give you results in the short-run.
http://economictimes.indiatimes.com/news/economy/indicators/breaking-4-week-trend-food-inflation-up-at-855/articleshow/8595444.cms
Comment;
Inflation in fuel can be seen affecting prices of other essential commodities. Low stock and exploration of new sources of fuels, be it oil or gas, is putting pressure on prices to swell to food items. Exploration of oil and gas within INDIA in the short-run is difficult to achieve and effect of these on prices can only be seen in the long-run, 5-10 years ahead. During the short-run INDIA can take help of oil-producing countries to import their products. But, for this they need foreign currency reserves which they have accumulated during good seasons. Food inflation is declining but they can not remain unaffected by surge in fuel prices. Fuel prices can be seen to be constant for more than a year, they are neither increasing or decreasing. One interpretation of this trend could be bad management of the affairs, but, if the government has foreign currency reserve the when they are going to use it. We do not need food to be bought with that money we need price-stability and fuel prices are affecting that crucial variable. Opening imports and letting the Indian currency appreciate is another way around, which means cheaper imports and would also help in reducing our international-trade-deficit. I have heard about taking 25 paise out of circulation but that would mean a depreciating Indian currency. At this time when inflation is a major concern for liquidity to the industrial sector opening imports and letting the currency appreciate can give you results in the short-run.
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