I News India - Empowering Ideas!

The International Monetary Fund (IMF) warned that India needs to tighten its monetary policy to maintain the economic stability amid surging fuel prices and souring inflation rate. The impact of the later is not so big but the need of the hour is to stress on monetary policies and plans to be able to feed their people properly.

IMF Managing Director Dominique Strauss-Kahn at the release of a new IMF study said, “If food prices rise further and oil prices stay the same, some governments will no longer be able to feed their people and at the same time maintain stability in their economies.”

The latest IMF study says that the effect of price hike is most acute for import-dependent poor and middle-income countries confronted by balance of payments problems, higher inflation and worsening poverty.

Kahn said, “Some countries are at a tipping point.” Kahn said such countries needed help from the international community for good policy options.  “Their challenge is ours. It is to ensure adequate food supplies while preserving the poverty-reducing benefits derived in recent years from faster growth, low inflation, and better budget and balance of payments positions,” he added.

Kalpana Kochhar, senior advisor in the Asia Pacific Department of the fund said, “India is a large country and it has USD 312 billions in reserves. The fact that you had a near doubling of oil prices over a period of year is going to impact the current account and you are seeing it.”

“You would not have seen Indian highlighted…. The impacts are big but not so big. There are positive inflows and the results are still large,” she added.

IMF study revealed that India is also struggling with the global problem of inflation and fuel price hike but the effect of these problems can be reduced by only changing the monetary policies and strong economic plans.

Tags: Economic Stability, Fuel Prices, IMF, India, inflation rate, International Monetary Fund

Food price is hitting high in the last few months due to gradual increase in inflation rate. It is a high time for Indians and the government when people have to now think before eating. Food, the most necessary thing for Human to live, becomes so costly that it is getting far from the hands of common man.

Annual inflation rate for the week ended June 14 raced to a 13-year high of 11.42%. It is the 18th consecutive week that the inflation rate has been above 5.5 per cent, the RBI’s target by the end of the fiscal year in March 2009.

Much-needed commodities are disappearing from the menus of Indian families due to inflation. Choices are shrinking with tightening budget.

Savita, a housewife, wants to feed her family dal (pulses), the staple diet for Indians but with prices of pulses soaring, it’s getting tougher everyday.  Dal will soon be a luxury foe common man if the soaring food prices would not stop.

“The Diet Chart sent by their school has asked us to feed dal twice a day to our children. But prices of pulses are now so high that I can’t feed them dal everyday. My big worry is that their health may suffer, as we can’t give them enough pulses,” said Savita.

It’s getting tougher for people, especially salaried employees to reduce their expenses as they have to look to cut corners wherever possible.

One of the employee said, ”My salary remains fixed but prices are soaring. So we are cutting down on all our comforts and are planning how to reduce food expenses. But the cost of every dal is now so high that we have to think many times whether we should buy them.”

Government and RBI have taken several fiscal and monetary steps to cool inflation, but these measures may also have a slowdown effect on economic expansion.

With inflation reaching into double digits, even ordinary food item now seem like costly delicacies. When government is busy in meetings for Nuclear deals, common man is still struggling to make both the ends meet of their life. Nuclear deal is essential to be cared but inflation is the issue which remains in speech only. No careful action by the government is coming on this issue. Opposition parties are claiming that give us the power, after that we will show what we can do. They only keep blaming the central government for inflation. Centre says that N-deal is essential to be signed as it is the matter of Prime Minister’s reputation but what about the matter of common man’s belly?? Who will take care of it? Is it not government’s responsibility to check the inflation so that people can at least have their two time meals properly??

Inflation is the biggest challenge of the hour. Can you suggest some measures which the government should take to combat the crisis??

Tags: High Prices, Indians, Inflation, Inflation Blast, inflation rate, Price Rise

Reaching untouched heights step by step, inflation has again jumped a big step to 11.05 per cent for the week ending on June 7 after an 8.75 per cent in the preceding week. Fuel price rise announced on June 4 pushed the inflation rate to this 13-year high level. Earlier, a high inflation of 11.11 per cent was witnessed on May 6, 1995.

Chidambaram revealed that he had warned the Union Cabinet on the effect fuel price rise would have on inflation but it could not be avoided. A visibly concerned FM said, “These are difficult times. Government is aware of people’s difficulties, but fuel price hike was unavoidable.”

He said, “Inflation is high. RBI must take steps and it has taken.”

Sensitive BSE index of stock markets slipped about 350 points as soon as the data is released. The dipping of 350 points reflects the nervousness of the investors about the efficacy of the measures being taken by the Finance Ministry and the Reserve Bank of India.

Leading economists and analysts predicted that food price rise would prompt the Reserve Bank of India to further tighten the monetary policy, possibly by making short term lending to banks costlier.

This could further lead to increase in interest rates for cars, homes and consumer finance, economists said and feared that present situation could also force a hike in lending rates for the industry and many banks are already contemplating hiking the prime lending rate.

“The high inflation may force the RBI to increase the repo rate (short term lending rate to banks) by up to half a percent,” Principal Economist of rating agency CRISIL D K Joshi said.

He further stressed that unless fuel prices are controlled the prices would be a major challenge.

The previous high in the UPA regime was 8.33 percent, as per the provisional figure for the week ended August 28, 2004.

Tags: FM, High Prices, Inflation, inflation rate, Rising Prices, Union Cabinet

Once again inflation is showing an increase and this time it surges to seven year high at 8.75% for the week ended on May 31 as compared to 8.24 % of previous week.

The costlier food and vegetables accounted for 0.51 percent increase in inflation from the preceding week leading fears to cross 9 percent after rise in fuel prices earlier this month.

The Wholesale Price Index (WPI) rose up by 0.6 percent touching 231.1 compared to 229.8 the last time. The WPI for manufactured products was up 0.7 percent whereas that for primary articles it was up by 0.9 percent.

Prices of foods and vegetables, cereals, milk, spices and some manufactured products are increased along with mustard oil and groundnut oil also. Despite, several government measures to contain cement rates, prices marginally increased.

Several measures are taken into account to reverse the inflation, including RBI’s raise of short-term lending rates to banks by 25 basis points on Wednesday but inflation is reaching new records every time.

It was 8.24% the week ending May 24 and 8.1% for the week ending May 17. The inflation was 7.82% for the week ended May 10 as compared to 7.83% for the previous week, said the official figures released today indicating a steady rise in prices from the past several weeks.

During the corresponding week a year ago, the inflation stood at 5.62 percent. Wholesale prices-based inflation stood at 5.15 percent a year ago.

Tags: India, Inflation, inflation rate, Price hike, Rising Price

Once again inflation rate has reached a new height of 8.1% to give stress marks on the forehead of government and the public. Inflation struck at 8.1% for the week ending May 17 against 7.82% for the week ending May 10 in the face of surging international crude oil prices.

Finance Minister P Chidambaram, is however, still confident to suppress the rate and control the surging prices in India. The Finance Minister added that authorities may take more steps to control inflation if needed.

“It is worrisome, but we are confident of gaining mastery over inflation,” he said.

The inflation was 7.82 percent for the week ended May 10 as compared to 7.83 percent for the previous week, said the official figures released today.

During the corresponding week a year ago, the inflation stood at 5.62 percent.

Amid speculation of rise in prices of petroleum products, inflation is likely to remain high for the next 3-4 months. Analysts said that increase in the fuel price will further raise the inflation.

The Reserve Bank and government must have to take additional monetary and fiscal measures to control the rate.

Tags: Commodities, Essential Commodities, inflation rate, Prices, Rising Prices

Country’s inflation rate touched new height to hit a 41 month high of 7.41 % since November 8, 2004 for the week ended on March 29.

The data is released be the Ministry of Industry and Commerce today. The Wholesale Price Index (WPI) based inflation rate is at the highest in the last three years. It was at 7 % on last Friday.

Meanwhile, Prime Minister Manmohan Singh on Thursday has shown his concern over growing rate of inflation. He feared that a steep rise in the food prices would make difficult to control inflation. He urged the global community to join hands to control the mismatch in supply-demand.

He said that inflation is global phenomenon and urged the need to find creative and imaginative solutions to combat inflation. Efforts are needed to increase farm incomes, food production and, at the same time, it will also contribute to greater purchasing power in the hands of the poor.

The Cabinet Committee on Prices (CCP) had decided on March 31, to abolish import duty on all crude edible oils, including palm and soya, and banned the export of non-basmati rice and pulses to contain inflation.

The Central Government also decided to raise the Minimum Export Price of basmati rice to 1,200 dollars per ton from 1100 dollars, to balance the demand - supply in the domestic market.

An import duty on butter and clarified butter is also decided to cut from 40 to 30%. The 15 % import duty on maize was also abolished, applicable on import of up to five lakh tons.

According to analysts, the announcement of Sixth Pay Commission recommendations, and provisions for enhanced expenditure on social sectors in the Budget 2008-09 coupled with rising crude oil prices have resulted in high inflation.

The International Monetary Fund (IMF) has forecast India’s inflation to moderate to 5.2 % in the current year and 4% in 2009, as against 6.4 % in 2007.

Tags: India, inflation rate

The feel good factor of the union budget is over now, India is now struggling from the inflation rate. The week which ended on March 22, inflation rate reached to a new high of 7%.

This new high inflation rate has increased the prices of all essential commodities like food, vegetables, minerals, steels, and other manufactured items. Within one or two weeks people are expecting a new high in the rates of the essential commodities.

This incident is putting some sort of pressure on the center’s UPA government lead by Manmohan Singh, who him self is a great economist. All the supporting parties are now pulling Congress for this issue, no one wants to face the blame for it.

Government has decided a few steps like to abolish import duty on crude form of edible oils, cut rate on refined edible oils and ban non-basmati rice exports but these are still not decreasing the rates of essential commodities.

It is now a bit sure that RBI will also going to take some step very soon to stop the further growth of inflation rate.

Tags: , budget, Commodities, food, India, inflation rate, minerals, vegetables