Inflation is the enemy #1

With the inflation rate rising, officials in North Block have gone into a firefighting mode. Finance Minister P. Chidambaram has already indicated that he is willing to trade off higher economic growth in order to check prices (it almost certainly rules out a move to a softer interest rate regime anytime soon).

Then, Finance Secretary D. Subba Rao told BT: “Imports of commodites will be considered wherever they’re required. We will do whatever it takes to rein in inflation.”

Already, the government has reduced import duties on all edible oils and has doubled the minimum export price for basmati rice. More such measures are likely over the next few weeks. But will they have the desired impact when inflation is emerging as a global problem? Only time will tell.

 — Rishi Joshi