GDP Data - May 2013

Today’s GDP data of 4.8% hasn’t come as a shocker and is in line with what was expected. Our Prime minister’s dream must have shattered after he announced yesterday that the days of 8% GDP aren’t far away, during his Japan trip.

Today’s GDP data has made history as now FY13 will go down as the year the country clocked its slowest growth in a decade. Even after all this the government hasn’t learnt much. It is gripped with policy paralysis not to mention the corruption cases coming out in multitudes on a routine basis.

Inflation - Too early to flutter with it

The recent inflation data both CPI & WPI have come in the comfortable range of RBI, but there is need to exercise caution.

The basic cause of inflation in India is supply chain bottlenecks. The constraints that are in supply chain from farm to fork still persist. Though RBI has been able to claw down inflation by increasing interest rates at various occasions, but it has also curbed consumption. Consumption theory was the only USP, which was being showcased to the world that India had. To reduce inflation by reducing consumption is not the way to go forward. It shows RBI’s, the Finance Ministry’s and on the whole Indian Government’s short sightedness to tackle the issue.