| While policymakers in India are concerned about how to fight inflation, it's worth keeping in mind inflation is a global problem at the moment, and despite growth in both the US and the Euro slowing dramatically, and likely to get worse, there is little sign of inflationary pressures reducing there. Indeed, inflation numbers in the US are around 4 per cent, a figure you wouldn't think goes naturally with a near-recession in the country. Countries like the UK, Brazil, Russia, Japan, China, and the Euro Area are letting their currencies appreciate against the dollar, ostensibly a policy response to lessen the inflation impact "� for India, this may not be an option, however, given how this could affect export prospects (some economists argue the inflation-appreciation link is not automatic either). In any case, when it comes to agricultural produce where inflation continues unabated, India is a net exporter of around $8-10bn, so appreciation may not have a one-sided impact either. What's worrying here is that, like India, other countries too are beginning to ban exports, a policy which can only lead to supply shortages and agricultural prices rising in the short term. |
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