Here is HSBC’s Forecast for India. Wholesale price inflation probably peaked in March and will more than halve to 4% by year end, in our view. Key drivers of the WPI rate, including international food, metal and energy commodity price inflation, are now turning down, while a better monsoon will help drive food price inflation lower.
Expect GDP growth to average 8.8% in 2010/11, just beating consensus projections, which continue to move up, of 8.3%. Activity
will be supported by an impressive bounce back in agricultural output, as well as the lagged effects of the fiscal and monetary stimulus and higher oil & gas output.
The RBI has now raised the Cash Reserve Ratio by a cumulative100bps and the repo/reverse repo rates by 50bps during the
current calendar year. We are looking for another 50bps of CRR hikes and 150bps of repo and reverse repo rate increases before
the central bank is done in end-2011. This in turn is likely to drive bond yields higher, although short-term rates will rise more.
The result will be a bear flattening of the curve. Meanwhile, we expect the rupee to strengthen to 45 against the USD by March 2011.
Hi…i am B.tech 2nd year student…and i want to know the relation between inflation and GDP?
is inflation is necessary for the growth of our nation…plz..reply..!!!thnx..
I am not an economist but it looks like both are directly proportional in the context of India. As and when the GDP Growth is chugging at 8%, Inflation is also very high, even in double digits. Courtesy – Corruption in the Government & Support Prices for Crops [another mode of corruption in the Agricultural Ministry] + Lobby of Industrialists involved in Metals and Commodoties who in cartel raise the prices like they did for cement just couple of days ago.