INDIA has the potential but inflation needs to come down...

Article;
BofA three positives for Indian markets.

Comment;

India needs two things to grow in the long-run, a good rate of growth of population, a supportive one, and a good stock of food, which INDIA has to push for growth. INDIA has the capacity to withstand any crisis. We have shown our resilience... We are only stuck in inflation, especially supply side, transport and availability of demand, Good & services, which is why prices are high. We need more investment to bring the articles to the market...

Article;

RBI Guv D Subbarao hikes interest rates but not quite. 

Comment;

If Subbarao is concerned about inflation then a rise of 50-100 bps hike in interest rates will only dent inflation by 1 %. Actually the Taylor rule says that if we have to reduce inflation by 1% then the Reserve-Bank has to increase interest rate by more than 1%. But INDIA's woe is imported inflation, especially through oil and transport prices transmission to other prices. I'm not sure how this rate hike will play out to reduce inflation, especially CPI. I hope that 1 % hike in interest rate will reduce inflation by 1% (at best)...