RBI once again has disappointed the market by not improving
the liquidity in any form. It is just kicking the can down the road. Here is
the CPI inflation data for past 12 years and we see that CPI climbed to 10%
since 2004 where it remained until 2008 and fell to 9% in 2009. And after that
it is moving between 9-11% till 2013.
Keynes said that wages and prices are flexible upwards and
they are rigid downwards. In the above graph we see that CPI is elevated at 10%
since 2004 and has not come down below 9 % since 2009 which supports the
Keynesian view that the CPI is now very sticky around 9-11%.
If we take a longer period view, say 50-60 years, then again
we find that CPI inflation in INDIA
has remained near 10% since 1977 as shown in the graph below;
Inflation in INDIA
is a deep structural problem and the supply side hardly supports the demand
scene of a billion people economy…
No comments:
Post a Comment