Inflation in India is rising and RBI fears overheating; therefore it calls for supply side management. The Finance Minister dubs the rise as a monetary phenomenon and a result of base effect. However, discerning critics call for agrarian reforms.

Continued expansion of the Indian economy at such breathtaking pace leads us to ask whether this momentum is sustainable. Apparently, nothing in the air requires this sudden concern and we might even sound cynical to the average Indian who feels the going was never this good. After all, GDP growth was 9.2% for the last year and even the average growth rate over the past four years has been more than 8%. The increasing economic activity seems to suggest that India's expansion trend might converge with that of China and even exceed. To substantiate this opinion, even the coming five year plan in 2011-12 has set a target of 9% average GDP growth. Table 1 summarizes the growth in various sectors with reference to the previous year.

However, whatever growth and prosperity that we are talking of has not meant anything material to the 60% of our population living in the backward parts of our country. A deeper look into the economy would reveal a few issues that corroborate with our concern about the sustainability of the economic growth and the overheating.

Professional Banker Magazine, Inflation, Indian Economy, GDP Growth, Gross Domestic Product, GDP, Forex Markets, Emerging Markets, Global Economy, International Monetary Fund, IMF, Indian Policy Makers, International Financial Markets, Open Markets, Commodities Futures Market, Monetary Policy Transmissions, Market Stabilization Scheme, Liquidity Adjustment Facility.