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Lately the pro-Modi govt response to economic criticism from people from the previous UPA government -- besides claims about corruption -- has been to point out
by firasd 7y ago
Lately the pro-Modi govt response to economic criticism from people from the previous UPA government -- besides claims about corruption -- has been to point out higher inflation in the previous era. Here, the former Prime Minister says:
> Rural India is in terrible shape. Our farmers are not receiving adequate prices and rural incomes have declined. The low inflation rate that the Modi government likes to showcase comes at the cost of our farmers and their income, by inflicting misery on over 50 percent of India’s population.
This question -- should inflation be higher to improve rural income -- is a bit beyond my economic knowledge but an interesting counter-argument. Maybe people with a better understanding can weigh in.
- gingabriska 7y agoWell inflation has to be at some healthy level. Low inflation means there isn't much money in market chasing goods and services. It can happen if there is simply no demand for goods/services. So you don't see price for goods/services going up. High inflation means too much money chasing limited goods, leading to price of goods and services soar. Both are bad for the economy. In a country like India, government expenditure drives economy. If government hoards all cash and sits atop it, sucking market dry - it's bad for economy but you can claim lower inflation only for sometime before the supply also adjusts to the current demand, shrinking the economy and then cycle continues, you end up with slower growth rate or growth reversed. Look at growth rate, what do you see?
- firasd 7y agoThanks for the info. Yeah growth is definitely slowing down, quarter after quarter.