This is a terrible situation for a growing economy to be in, and the central bank would be expected to act to correct the situation.
Already witnessing a sharp decline in inflation, India would see deflation or reduction in general price level from next month due to slackening demand, financial services firm Goldman Sachs said on Monday.
The Economic Survey has acknowledged the measures taken by the UPA government on the macro stabilisation front and the successes achieved in containing the current account deficit and reducing the fiscal deficit.
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The rupee is set to breach the Rs 60-a-dollar mark again this week as the Street expects foreign institutional investors to continue pulling out of domestic markets. According to the street, this would result in government bond yields rising.
The WPI inflation stood at negative 2.4% in May 2015, compared with a negative 2.65% in April 2015.
"This year (2009-10), our WPI is low and I don't see any problem on the horizon which could destabilise us except oil prices which remain a question," said Rajya Sabha MP and former Reserve Bank Governor Bimal Jalan. On the high fiscal deficit, Jalan said he did not think stimulus packages posed a problem. On taxation, he said it would not be good for the country not to have a reasonable rate of tax on profit and dividend.
The move aimed at blunting Finance Ministry, RBI's opposition to monthly reporting.
While inflation dropped to 0.44 per cent for the week ended March 7, the BPLR of the top five Indian banks was in the range of 12.25-16.75 per cent. In the corresponding period last year, inflation was estimated at 7.78 per cent, while lending rates were in the range of 12.25-12.75 per cent. Real interest rate is the difference between WPI-based inflation and the prevailing benchmark prime lending rate.
Global banking major, HSBC has retained its India GDP growth forecast of 6.2 per cent in FY10 but hiked the outlook for next fiscal by 0.5 per cent to 8.5 per cent given the economic recovery.
The finance ministry and Reserve Bank of India have reservations on the computation of inflation data on a monthly basis, a senior government official said on Thursday. Finance Minister P Chidambaram will have to meet the Reserve Bank to reach a consensus on the committee's suggestions to have a new series of WPI on a monthly basis, he said on the sidelines of a function to release the results of the Fifth Economic Census.
While third quarter results do not reflect it, the sector's reluctance to cut interest rates points towards either high NPAs or wrong strategies.
Rising prices of food items and industrial goods are likely to push inflation to eight per cent in the next six months, much above the RBI's projection of 5 per cent, global financial services firm Nomura has said.
While the finance minister is in favour of sacrificing some growth to curb inflation, the problem lies in inflation being more a supply-side than a demand-led problem.
The 30-share Sensex ended down 66 points at 28,438 and the Nifty ended down 15 points at 8,633.
Inflation is far too important a problem to have to rely on an inadequate and, ultimately, unreliable database for solutions.
Food prices saw a sharp rise of 3.12 per cent in March compared to 2.69 per cent in the previous month
The S&P BSE Sensex dropped 1 points to end at 26,396 and the Nifty50 slipped 2 points to end at 8,109.
The agriculture sector has witnessed feeble growth on account of drought for two successive years
Food inflation in April stood at 6.08 per cent, while the overall WPI inflation fell to a three-year low of 4.89 per cent.
Finance Minister Chidambaram said rising prices of primary food articles was worrying him. High food prices the world over and a supply-demand mismatch were behind the high prices, he said, adding this was beyond the influence of the monetary policy.
The Reserve Bank of India may soon be given the job of both collecting and processing inflation data.
BSE Auto was the top sectoral loser with a 4.6% fall followed by realty sector down 3.7% and consumer durables 3.6% post disappointing IIP numbers
Earning woes drag markets lower; TCS, HUL lead fall.
What differentiates Rajan from his predecessors is his proactive steps in anticipating a problem and coming up with out-of-the-box solutions
The recent softening of inflation is purely a base effect at play.
Zero inflation will pave way for rate cuts in the next RBI policy.
It is the six per cent target RBI is more concerned about.
It may begin that way with, say, supply shortages in farm products due to adverse weather, but if monetary policy is eased to accomodate this, the effects become permanent.
In December, the index fell a provisional 0.73 per cent.
Fifty per cent of bank restructured assets were in infrastructure, steel, power and telecom sectors.
In December 2014, it was (-)0.50 per cent.
The report further noted that inflation is expected to fall to 4.5 per cent by quarter ended March 2017.
RBI recently cut repo by 0.25 percentage point, taking the rate to 7.25 per cent in three reductions since January.
Credit as a proportion of GDP is low in India by international standards.
A host of factors including the reform measures taken by the government and decline in global oil and commodity prices have led to lower inflation, the Finance Ministry said on Wednesday.
The rupee and a BMW both move fast. So will a rise in the rupee make the BMW move even faster?
There is considerable evidence to suggest that the Indian inflation problem is a has-been problem, a problem that has ceased to be.
Inflation fell for the second consecutive week to 7.02 per cent for the week ended December 4, mainly due to cheaper primary and fuel products.
In spite of Governor Raghuram Rajan's repeated concerns about inflation, many think there may still be a loosening of stance.
"The poor will not suffer disproportionately due to bouts of sharp inflation, and the middle class will not see its savings eroded," Raghuram Rajan said.
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