Inflation puts govt on defensive

Vivian Fernandes , CNBC-TV18

Inflation has put the government on the defensive. Will a defensive government chip away at economic reforms?

It is a feel good message that Commerce and Industry Minister Kamal Nath wants to convey despite inflation being in double digits and the measures taken by the Reserve Bank to contract demand.

Exports in April grew 31.5% to USD 14.4 billion,  imports rose 36.6% to USD 17.7 billion, FDI inflows at USD 3.74 billion surged 127% over April last year.

Projecting these trends into the rest of the year, the minister believes that growth will not be crimped despite high interest rates.

Kamal Nath, said, "Companies have fat, that needs to be trimmed."

The minister who has won all Lok Sabha elections that he constested except one, agrees with the Finance Minister that inflation has put the government on the defensive. 

The commerce minister said, "We need a second revolution in agriculture. Farmers need to be supported."

As with the loan waiver announced in February, the government will try to buy its return to power. It hopes that voters will understand that inflation is an imported problem, not caused by economic mismanagement. but it cannot be sure.

The Finance Minister on Thursday said inflation will remain in double digits for some weeks. He said Government will be on the defensive on inflation..

He emphasised the need to communicate to people on the efforts to moderate inflation.