Inflation poses main challenge to Indian economy, experts say

08:16, July 14, 2010      

Email | Print | Subscribe | Comments | Forum 

The main risk which the Indian economy is facing in the coming quarters lies in inflation, said experts Tuesday on the sidelines of an event by Financial Express.

While expressing optimism to government-set GDP growth aim of 8. 5 percent in current fiscal year, C. Rangarajan, chairman of Economic Advisory Council to the Prime Minister, told Xinhua that inflation now is the major concern of India's central bank and its No. one task is to contain inflation.

The main risk the Indian economy faces now is inflation and this should be watched closely, said Stuart A. Davis, chief executive officer with HSBC in India.

Indian headline inflation topped 11 percent in March and is expected to be around 11 percent in June due to fuel price deregulation.

Davis said domestic demand of India is strong and it's not the case for the Indian economy to dip despite worries of the second one in other economies.

The sharp drop of growth rate with industrial production in May resulted from bottlenecks at the supply side and it's a shot-term phenomenon, according to Davis.

Kalpana Morparia, chief executive officer with J.P. Morgan in India, also spot inflation as the main risk with Indian economy and said the government has to walk the subtle balance between growth and inflation.

India also faces the risk of capital flow swings amid volatile world market and political risk from possible stupid political decisions, said Adil Zainulbhai, managing director with McKinsey's India operations.

The Indian central bank has adjusted up key lending interest rates by 75 basis points in three times so far this year in a bid to contain double-digit inflation.



  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • On Sept. 28, tourists travel around the Mingshashan Scenic Area in Dunhuang, Gansu province by camel. With the National Day vacation right around the corner, more and more tourists from home and abroad are going to Dunhuang. Riding on a camel, they travel in the desert to enjoy the cities rare form of natural scenery. (Xinhua/Zhang Weixian)
  • Chinese forest armed forces work together with forest firefighters on Sept. 28. (Xinhua/Chai Liren)
  • Photo taken on Sept. 29, 2011 shows strong wind blows trees in Sanya, south China's Hainan Province. Typhoon Nesat heads towards south China and is moving at an average wind speed of 20 km per hour toward the west coast of China's Guangdong Province. (Xinhua/Hou Jiansen)
  • A fallen tree is seen on a road in Qionghai, south China's Hainan Province, Sept. 29, 2011. Typhoon Nesat was predicted to land in Hainan later Thursday, bringing heavy rainfalls to the island. (Xinhua/Meng Zhongde)
  • Arash Kamalvand (L) of Iran spikes the ball during the semifinal against South Korea at the 16th Asian Men's Volleyball Championship in Tehran, Iran, Sept. 28, 2011. Iran won 3-1 to advance to the final. (Xinhua/Ahmad Halabisaz)
  • A man visits "Thy Word Is Truth, the Bible Ministry Exhibition of the Protestant Church in China", during its opening at Mount Vernon Place United Methodist Church in Washington DC, capital of the United States, Sept. 28, 2011. Through the Bible's various Chinese versions, ancient or modern, as well as pictures, paintings, calligraphy, art works and historical documents, the exhibition was expected to give an overall understanding of how Bible was brought into China, how it was translated, published, distributed and loved. (Xinhua/Zhang Jun)
Hot Forum Discussion