RBI Governor Raghuram Rajan has noted the contradiction.
Externally, the global economy is stabilising, with better growth is expected this year.
PMO being sent daily updates on food cost situation in four major metropolitan cities to ensure no unusual flare-up.
Investors booked profit ahead of the outcome of the two-day US Fed policy meet which begins today.
India Inc on Wednesday said the Reserve Bank's move to cut interest rate by 0.50 per cent is "pro-growth" and exhorted banks to transmit the lower interest rate to borrowers to revive demand and kick-start the investment cycle.
The Finance Ministry on Thursday said the growth rate in the current financial year will accelerate to 5.8 per cent, better than previous estimates, saying the green shoots of economic recovery are now visible.
The broader markets ended in line with the benchmark indices- BSE Midcap and Smallcap indices ended higher by 1.3% and 0.9% each.
The previous bout of Fed withdrawal fears had threatened to spark a crisis of confidence in India -- sending the rupee to a record low of 68.85 in late August and leading to steep falls in bonds and stocks.
Technical rallies and short covering may arise only if the markets break this 500 point band
CPI inflation has declined by almost a percentage point from July, from close to eight per cent to just above seven per cent.
It would be a miracle indeed if we grow at 7/8 per cent a year over the current and next few years, says A V Rajwade
Janmejaya Sinha lays down Urjit Patel's agenda - cleaning up bank balance sheets, evaluating robustness of CPI and pushing for digitisation in financial services.
Analysts expect RBI to restore 100-bp corridor in Tuesday's policy review.
Metals, auto and banking shares were in the limelight in this session; the FMCG pack, however, ended lower.
The RBI Governor brought down retail inflation to 3.8% in July.
Reserve Bank Governor Raghuram Rajan is widely expected to hold the key rates citing high inflation at the fourth bi-monthly monetary policy announcement on Tuesday, even though the pro-growth lobby has been wishing for a rate cut.
This is the BJP's first full-year Budget.
The 30-share Sensex jumped 729 points to end at 28,076 and the 50-share Nifty soared 217 points to end at 8,494.
Market breadth was weak with 1,260 advances and 1,597 losers on the BSE.
The Sensex was up 70 points and the Nifty was up 20 points led by SBI on robust Q2 earnings.
Fresh investments are constrained by tepid demand.
Movement of rupee and crude oil prices will also dictate the trend
Though inflation, on the basis of the wholesale price index, is nowhere near the 1990-91 level of 10.26 per cent and India is in a much better position to check it, the greater integration of our economy with the globe has exposed it to a much higher risk of imported inflation.
The new IIP numbers should spread cheer among those who were part of the Manmohan Singh-led United Progressive Alliance, earlier accused of having presided over a steady deterioration in industrial performance, particularly in the last two years of its tenure, says A K Bhattacharya.
We are entering a period of turbulence, but you can profit off that volatility.
The long-term growth perspective or potential for India is one of the highest in the Asia Pacific region.
The market breadth ended weak on the BSE with 2,086 shares declining and 893 shares advancing.
It is pegged at 6.8-8% by various economists, as compared to 6.7%.
The 30-share Sensex ended down 35 points at 26,349 and the 50-share Nifty ended down 20 points at 7,864.
Shares of rate sensitive sectors such as realty, infrastructure, banking and automobiles ended higher ahead of the Reserve Bank of India (RBI) mid-quarter policy review on June 17.
The muted CPI inflation print at 5% earlier this week, followed by a similar WPI number released Wednesday, seems to have spurred India's central bank into action, is how the economists are reading into Reserve Bank of India governor Raghuram Rajan's 25 basis point cut in repo rate.
The govt would also be coming out with more measures to deal with inflation.
Addressing bankers and economists at Bancon 2013, a flagship event of the Indian Banks' Association, Chidambaram told the lenders to deal firmly with wilful defaulters, but handhold those who are reeling under the impact of the economic slowdown.
He said the UPA had left the economy in a dire state, with Consumer Price Index and food inflation at double digit, Wholesale Price Index inflation around 6-7 per cent and growth prospects were limited.
Finance Minister Arun Jaitley said the inflation index would determine the nominal growth figure, and it is better to set modest targets and outperform them.
Chief economic advisor Arvind Subramanian discusses the Budget, goods and services tax, Centre-state relationship and larger issues facing the economy
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