Monday, January 17, 2011

Roubini on The Inflation in India

Nouriel Roubini :"...In part, what is happening is that some of the inflationary pressures are external to the country. There is increase in global commodity prices. Oil, energy, food-... that is not directly in your control.But it is also that domestic demand has been robust for good reasons. But, constraints are on the supply side. If demand is growing, supply has to grow as fast to maintain price stability. There are bottlenecks on the productive side of the economy because of lack of infrastructure.  Invest in a various range of economic reforms to sustain an increase in potential growth. Make sure that as potential growth becomes higher, actual economic growth becomes higher and then inflationary pressures get contained. If actual growth becomes higher than potential, then one of the consequences will be rising inflation..."

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