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India records 2-decade low inflation; trend to continue

In a compliment to the government's economic reform policies, the Economic Survey on Tuesday said the inflation dipped to a two decade low during the current fiscal "as a manifestation of globalisation and liberalized trade regime".

Forecasting continuation of a low inflation (rate of price hike) trend, Economic Survey 2001-02 said low prices in the manufactured sector, crude oil and agricultural foodgrains led to a dip in inflation to the lowest level over two decades at 1.3 per cent at the beginning of this year.

"With the opening up of the Indian economy, subdued inflation rates of major trading partner countries have a bearing on the domestic economy, influencing to some extent the domestic inflation rate," it said but added that continuation of low global international prices would play a major role in containment of general price hike.

While painting the rosy picture, the survey, revealed that the moderate inflationary expectations may continue through 2002-03 if there are not external energy price shocks.

The opening up of trade has increased competition for Indian industries and low inflation in competitor countries have had a sobering effect on domestic prices in the manufactured sector, it said.

Further, low international prices of crude oil exerted less pressure on domestic energy prices and adequate supply of most primary products and over supply of foodgrains caused inflation in the primary sector also to remain low this year, the survey said.

PTI

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