The recent mass demonstration by sugar producers could just be the tip of the iceberg that is about to slam India’s economic ship.
In fact, the current year’s Wholesale Price Inflation (WPI) is likely to end at 7 per cent or more. But the real yardstick to measure the affordability of the common man, the Consumer Price Inflation (CPI) might again reach the debilitating range of 12-13% as it did around two years ago. Not just this, with a sudden splurge in the capital markets by revived influx of foreign investors and the excessive overpricing of stocks and IPOs is leading to a scenario where an asset price bubble could form pushing the overall inflation further. In fact, according to Dr Mukesh Anand, Senior Economist, National Institute of Public Finance and Policy (NIPFP), “Especially at a time when per capita (disposable) incomes are also rising, over-capacity in key (core manufacturing) sectors has led to burgeoning costs pushing prices up.” And one factor that would definitely make the ground more slippery for UPA regime would be the global oil prices pushing hard to relive ‘glory days’ of early 2008. With crude already near the $80 mark, this is one slippery terrain which can derail the growth engine once again.
In fact, the current year’s Wholesale Price Inflation (WPI) is likely to end at 7 per cent or more. But the real yardstick to measure the affordability of the common man, the Consumer Price Inflation (CPI) might again reach the debilitating range of 12-13% as it did around two years ago. Not just this, with a sudden splurge in the capital markets by revived influx of foreign investors and the excessive overpricing of stocks and IPOs is leading to a scenario where an asset price bubble could form pushing the overall inflation further. In fact, according to Dr Mukesh Anand, Senior Economist, National Institute of Public Finance and Policy (NIPFP), “Especially at a time when per capita (disposable) incomes are also rising, over-capacity in key (core manufacturing) sectors has led to burgeoning costs pushing prices up.” And one factor that would definitely make the ground more slippery for UPA regime would be the global oil prices pushing hard to relive ‘glory days’ of early 2008. With crude already near the $80 mark, this is one slippery terrain which can derail the growth engine once again.
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