By Himank Sharma, IANS,
New Delhi : There will be no respite from inflation that zoomed to a 13-year high for the week ended June 7, say experts.
“The current year will continue to see inflation in double digit. It will start moderating only in March 2009,” said D.K. Joshi, chief economist with the Mumbai-based credit ratings firm Crisil.
Joshi blamed the Congress-led United Progressive Alliance (UPA) government’s “lax policy” over the past two years for the galloping inflation figures.
“Had the government been increasing fuel prices in sync with the rise in global crude market, the situation would have been much moderate now,” Joshi told IANS.
D.H. Pai Panandikar, president of RPG Foundation, a Delhi-based think-tank engaged in research on macro-economic issues, said double digit inflation would persist at least for three more months.
He criticised the country’s central bank – the Reserve Bank of India (RBI) – for its monetary policy that has failed to tackle the problem of inflation.
“The RBI has been dormant and increased the repo rate only a few days back June 11. It should be more aggressive and adopt a tighter monetary policy,” he told IANS.
Indian economy clocked a growth rate of 9 percent in the previous fiscal. As per the government estimates, it is expected to grow at 8 percent to 8.50 percent in the current financial year.
Crisil’s Joshi agreed, but added a rider that the adverse impact of inflation would be felt in the long run.
“Indian economy will experience a growth rate of 8 percent or above in the current fiscal, but the negative impact of inflation will be felt in the long term. Inflation will have a negative impact on the growth next year onwards,” he said.
Concurred Shriram Khanna, a senior professor of economics at Delhi University.
“Inflation is more likely to affect the middle class and the poorer sections of the country. It has more of an immediate and short-term impact and will burden the common man,” he told IANS.
In what can yet prove to be a relief, the inflation figures released by the government Thursday showed a decline of 1.1 percent in the prices for food products.
Khanna said that inflation would ease if India had a good monsoon.
“A good harvest can come as a relief,” Khanna said.
G. Srivatsava, director, economic policy, at industry lobby Confederation of Indian Industry, said inflation would ease in months to come, and recommended reduction in oil consumption by switching to alternative fuels.
“We import 70 percent of our crude oil, and should reduce oil consumption by 10 percent which will reduce the burden significantly,” Srivatsava told IANS.