The fears of Indian economy slipping onto a deflationary phase was brushed by the Government on March 19, stating that a sharp fall in inflation this month has more to do with the high base a year ago than any great decline in prices.
The Cabinet Secretary K M Chandrasekhar told I do not see any sign of deflation right now. Probably, decline in inflation is more due to higher base last year than any significant drop in prices. The inflation dipped more than three decade low of 0.44 per cent for the week ended March 7. The industrial production in India reported a contraction for the second month running in January by 0.5 per cent due to the impact of global economic crisis. The exports too have been shrinking by a wide margin of 12-21 per cent for five months in a row since October this fiscal.
The government sees sign of recovery in the select sectors due to stimulus packages between December and February. The automobile as well as cement, steel and infrastructure sectors are growing, Chandrasekhar said. He said the low inflation would certainly weigh on the mind of the central bank and it will be looking at these figures in having its own decisions, he said adding the private sector banks should also join public sectors peers in cutting the interest rates.
The Cabinet Secretary K M Chandrasekhar told I do not see any sign of deflation right now. Probably, decline in inflation is more due to higher base last year than any significant drop in prices. The inflation dipped more than three decade low of 0.44 per cent for the week ended March 7. The industrial production in India reported a contraction for the second month running in January by 0.5 per cent due to the impact of global economic crisis. The exports too have been shrinking by a wide margin of 12-21 per cent for five months in a row since October this fiscal.
The government sees sign of recovery in the select sectors due to stimulus packages between December and February. The automobile as well as cement, steel and infrastructure sectors are growing, Chandrasekhar said. He said the low inflation would certainly weigh on the mind of the central bank and it will be looking at these figures in having its own decisions, he said adding the private sector banks should also join public sectors peers in cutting the interest rates.
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