RTTNews - India's inflation rate for the week ended May 30 nosedived to 0.13%, compared to the previous week's 0.48%. The figure was 9.32% for the corresponding week of the preceding year, say data released Thursday by the Ministry of Commerce and Industry.
Going by the provisional figures, the wholesale price index or WPI for all-commodities rose by 0.1% to 232.6 from 232.3 for the preceding week.
Inflation, based on the wholesale price index, fell despite higher prices of eggs, fruits and vegetables as also some manufactured products covered under all-category groups.
The final estimate of inflation for the week ended April 4 was enhanced to 0.83% from the earlier provisional figure of 0.18%.
The main index for primary articles rose by 0.4%, due to the higher prices of eggs, mutton, fruits and vegetables, condiments and spices, barley, moong, urad, as also raw rubber. However, the prices of coffee, raw wool, bajra, raw silk, raw cotton and gingelly seed declined.
The index representing fuel, power, light and lubricants was unchanged at its previous week's level of 324.0.
The index of Manufactured Products also remained unchanged at its previous week's level of 203.5. Though the index remained static, the prices of ghee, khandsari, printing paper white, as also cement moved up, while those of decorative laminates, electrical generators, pipes and tubes, zinc, texturised yarn, lead and zinc ingots, as also power driven pumps decreased.
According to Prime Minister Manmohan Singh, though fiscal deficit had increased sharply, India had enough resources to spend on flagship programmes, especially on infrastructure projects, and that would not lead to inflation, but to economic growth. He added that more investment in infrastructure was the right way to deal with the effects of slowdown.
Manmohan Singh added that the country could not spend its way into prosperity. But there was scope to increase the allocations, particularly for infrastructure, hoping Finance Minister Pranab Mukherjee would address this issue in next month's budget.
Pranab Mukherjee, while addressing the Chief Executives of Public Sector Banks/Financial Institutions, urged the banks to provide credit at reasonable rates of interest to restore the environment for rapid growth and ensure that the growth process benefited the Indian community. He added the reduction in key rates by Reserve Bank of India or RBI was not getting adequately reflected in the reduction of BPLR of banks, despite the prime lending rates of the banks coming down to 12-12.5% from 13.75-14.25% six months back.
Meanwhile, the Associated Chambers of Commerce and Industry of India or ASSOCHAM submitted a proposal to the Finance Ministry to ensure 12% manufacturing growth during fiscal 2010, as India's economy was expected to bounce back in the second half of this fiscal, though this sector continues to be under severe stresses.
The chamber also suggested the government to remove constraints on industry and agriculture, and reduce tax incidence on household purchases, to remove hurdles on investments in power, telecom and other core infrastructure sectors. The chamber further urged the private consumption expenditure to increase to 7.5% from the present 6.5% to spur demand.
Goldman Sachs, in its report, expects Indian inflation to surge to 6.5% by the end of March next year. The report added that the inflationary pressures were building up, and said that recent data on both the wholesale price index and the consumer price index showed a sequential bottoming out between February and April.
Most factors that impact inflation in India--the output gap, money supply, and commodity and asset prices--are suggesting a building up of inflationary pressures in the second half of 2009-10. However, in the very near term, year-on-year prices would be in the negative territory because of a high base effect, the report added.
The global investment banking and securities firm predicated the spurt in India's inflation on the increase in the prices of crude oil and select commodities.
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