Article;
Is the Indian-Economy heading towards stagflation.
Comment;
The key to reduce inflation is to bring food inflation down by implementing food security bill. By bringing inflation down we will have more room for aggressive monetary easing to push for higher growth rate. India is not too much dependent on exports and our problems are mostly domestic (inflation) and international due to fuel of which we could not take advantage of falling prices due to weakening currency. For INDIA the problem remains the same, "inflation" domestic because of food prices and international because of fuel prices. Monetary tightening can help reduce demand and inflation but we are, now, more concerned about bringing growth back because we think we are now stagflating… Unemployment is not a problem in INDIA but low per capita is always a problem. By hiking interest rates the RBI has once again signaled that keeping inflation, domestic and foreign (due to weak currency), low is its top most priority…
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