After remaining in the negative zone for the last 13 weeks, inflation
has risen to 0.12% for the week ended September 5. Of course, it was not
totally unanticipated: the surging food prices, coupled with the poor performance
of the monsoon early in the season and the resulting speculation about the
likely shortfall in production, have all cumulatively raised the index for
primary food articles to 14.67% and that of manufactured food products to
9.21% from end March. As these two constitute 27% of the wholesale price index,
it is no wonder that inflation has turned positive much earlier than anticipated.
That aside, with the governments across the globe propping up
economies by resorting to massive deficits and central banks cutting interest rates
substantially, many even touching zero, and the resultant revival of
economies being reported from various parts of the globe, what is now more worrying is
the prospect that the prices of manufactured products and commodities as
well may rise faster than anticipated.
And, India is no exception to this phenomenon. The market
borrowing program of the government has already been hiked to unprecedented
levels since September 2008, and with the government's gross market
borrowing budgeted at Rs 4,51,093, it is all set
to rise to gigantic proportions—an increase of 47% over 2008-09, on top of
the 82% increase in the year 2008-09. |
