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Indian inflation rises to double digits / The 123 agreement – a revisit

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The Wholesale price index (WPI) – a key measure of inflation was at a 13-year high last week. It is only predicted to increase. What does inflation do? Well, in simple terms and without getting into the jargon, it increases the price of your commodities – everything from a simple cup of tea to the groceries to a house purchase (rising interest rates) to investments and deposits in the bank. The value of money gets eroded away. This is why gold is considered as a hedge against inflation since its value remains largely unchanged during inflationary times. Paper currency does not have much value and if it does, it only deteriorates gradually as the inlation figures creep up.

Its not just the inflation that is giving sleepless nights to the seasoned politiico’s cum economists – Mr. Manmohan Singh (our PM) and Chidu (our FM).

They are also facing politcal backlash from the left, right and center – for their decision to go-ahead with signing of the 123 nuclear agreement with the USA.

These are interesting and worrying times for India’s political top brass and its to be seen how it pans out. I will be observing the developments closely.

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Written by Naveen Athresh

June 22, 2008 at 3:43 pm

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