Inflation At Five-Month High, Ultimatum For PM

BANGALORE: After Prime Minister Narendra Modi warned that he will administer some “bitterly medicines” to perk up the unstable economy, the new government is facing some new challenges. Indian wholesale inflation price has touched the highest of five months in May. It rose to 6.01 percent compared to 5.20 per cent in the previous months. In May 2013, the Wholesale Price Index recorded the inflation at 4.58 percent. Food inflation jumped to 9.50 percent and potato prices hit 31.44 per cent. The rupee weakened to 60.23 per dollar.

Since the prime minister took charge, the first priority of government was to control inflation but weak monsoon and turmoil in Iraq have raised a situation of risk. Modi has prepared ground for the tough measures. While speaking to the party members he blamed the previous government for the longest slowdown of the economy since 1991.

"A mother knows that if she doesn't give her child bitter medicine today, that will probably cause long-term damage. To improve the economic health of India, pull the country out of the current mess, shouldn't we take some bitter decisions?", said Modi.

Economist Upasna Bhardwaj of ING Vysya has called it shocking. She also told that the food price have increased piercingly. The interest rates were on hold by RBI but there are more chances that it could cut the rates as early as this year. Chief economist at Yes Bank, Shubhada Rao, said the data might lead the RBI to delay over any reduction. 

In 2009, India witnessed the highest food inflation of nearly four decades. Indian farmlands are highly depending on summer monsoon rains and the news from the weather department is also not in favor of the farmers. It has been predicted that there will be below average rainfall between June-September that can affect the summer crops and the economic growth of India as well. India is not untouched by the Iraq uproar. Adverse effects of Iraq turmoil can be seen in oil prices.