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Journalism of Courage
Common man will have to live with high prices for another two-three months as inflation is expected to come down only by September,Chief Economic Adviser Kaushik Basu said today.
As per expectations and calculations of the Finance Ministry,inflation will go below 7 per cent from September,Basu said at a seminar here.
8220;So,you have to live with this high inflation for another two-three months and it should begin to go down from September,8221; he said.
8220;From the middle of October,for the first time,you should see softening of inflation going down below seven per cent,8221; he told the seminar on 8216;Indian Economy and The Economic Survey8217;,organised by the Southern India Chamber of Commerce and Industry.
Basu,however,said that the government is taking stock of the situation and looking at 8220;fire-fighting8221; measures.
Inflation was at 7.55 per cent in May on the back of rising prices of vegetables and petrol.
Amid heightened inflation worries,RBI last month kept key policy rates unchanged to control the price rise,disappointing the industry and retail borrowers who were expecting at least 0.25 per cent rate cut.
The industry is pitching for cut in lending rates,saying high interest rate regime has slowed down the growth. Basu,however,noted that India8217;s inflation record was 8220;much much better8221; against other emerging economies.
Referring to the rupee depreciation,Basu said it was very similar to what was happening with other currencies of emerging economies.
8220;With the concern for Euro,its going to be dramatic experiment. You look for safe havens to invest like the US treasuries,German bonds and Gold. You find money is going to all three of these. But,if you look at the returns,the returns are close to zero.8221;
In this scenario,he said,with the couple of 8220;policy mistakes that we have made,I am not denying that there is growth slowdown in India. 6.5 per cent last year8217;s growth is comparatively a slow growth over what we did in the past.8221;
He,however,asked industrialists to make use of the opportunity,saying that China8217;s rising wages coupled with weakening rupee provided an ideal space for export thrust.
8220;8230;But that needs some intelligent policy measures and I believe that India should go for it. India8217;s future is immense in this,if we bring our acts together8221;,he said.
He also pitched for allowing foreign direct investments in retail sector,saying it would be 8220;highly beneficiary8221; for the farmers and be a major thrust to Indian exports. He,however,noted the issue met with huge amount of criticism.
Basu also said that corruption was something that India should be 8220;ashamed of8221;. 8220;India needs governance reforms and corruption control.8221;
8220;For ordinary people it is very very discouraging when you face a mountain of bureaucracy and the demand for bribes to be paid for these kind of things to be got to be done.. I personally feel that for a country that is on the verge of taking its seat at the global hightable,it is something we should be ashamed of..8221;,he said.
