"Inflation and credit expansion, the preferred methods of present day government openhandedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer." - Ludwig von Mises.
Finance Minister Chidambaram recently said that while he was confident that economy would grow by 8.8 per cent in the fiscal year ending on March 31, there were risks from turbulence on global financial markets and from rising oil, metals, wheat and rice prices worldwide.
"Keeping inflation under check is one of the cornerstones of our policy," he said. "Inflation is on the rise. It is a matter that causes worry to any government. When inflation is on the rise, all of us should be concerned," Chidambaram said.
"Internationally, there is a rising trend in commodity prices," Chidambaram said. It would not be easy to control inflation as long as India was dependent on the imports of such items. He said the government had taken some fiscal steps to control the prices of such items such as cutting import and excise duties. And there was no taxation on food items.
India's industrial production in January has grown by merely 5.3 percent as compared to 11.6 percent growth in previous year. The growth in manufacturing sector halved to 5.9 percent in January this fiscal compared to 12.3 percent growth in same month in 2006-07.
Everyone is now looking to the RBI which will review its Monetary Policy in April-end. A cut in key interest rates is vital to stimulate sagging industrial growth.
But just what is inflation? Click here to find out. . .
Image: Indian labourers sort and grade water melons at the Gaddiannaram wholesale
fruit market on the outskirts of Hyderabad. | Photograph: Noah Seelam/AFP/Getty Images
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