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Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
The government must be heaving a sigh of relief. After months and months of persistently high inflation, it believes that inflation is set to come down. This has largely been due to a drop in food prices and especially that of onions which has crashed drastically. Thus, the Wholesale Price Index (WPI) declined marginally to 8.23% in January from 8.43% in the previous month. Whether inflation finally comes down within the comfort limits of the RBI for the fiscal remains to be seen.
The industrial production too has slowed down in the last two months after growing at a healthy pace in the previous months. However, it seems early days yet to brand it as a slowdown and one will have to see in the coming months whether industrial production does manage to inch up.
Even if inflation does come down by the end of the fiscal, the government will have to seriously consider some long term reforms especially in the agriculture sector. A large part of the rise in inflation has mostly been due to the surge in food prices. That in itself was a product of poor monsoons in 2009 and wastage of foodgrain due to inadequate storage facilities. It is obvious that more efforts will have to be made to ramp up the agricultural infrastructure if surges in food prices gave to be avoided in the future.
If India's GDP has to grow at a strong pace in the future, it has to be matched by an equally healthy growth in agriculture and manufacturing. The last time the Indian government made some drastic changes to the Indian economy was in the early 1990s when precarious state of affairs on the foreign exchange reserves front compelled it to open up the Indian economy. Since then, reforms have grown at a snail's pace. Indeed, it would be in India's best interests if reforms are undertaken in a staggered manner rather than drastically at the time of crises. It is really up to the Indian government to pull up its socks and get down to some serious business.
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