By Subhadip Sircar and Prasanta Sahu
Inflation in India, while still troublingly high, was lower than expected in March. Was divine intervention involved?
Food prices declined slightly in March, but were other factors at play in the lower-than-expected inflation report?
At a seminar in New Delhi Friday, Kaushik Basu, India’s chief economic adviser, pointed out that he was at the Krishna temple in Udupi earlier in the week. The priest asked him to make a wish.
“It must be a sign that I have already spent too much time in government,” Mr. Basu said. “Usually one wish would be something for myself, but much to my surprise I found myself wishing for low inflation.”
Government work may be taking its toll on Mr. Basu, who left his job in the economics department at Cornell University to enter the hurlyburly of Indian bureaucracy. But Lord Krishna didn’t disappoint.
Mr. Basu returned to New Delhi to find March inflation of 9.9%, lower than the 10.25% increase that Dow Jones-polled economists were expecting. “Ten percent was a psychological boundary, and it has remained within that,” he said.
That set him thinking. “Maybe we should add, among our policy initiatives, the Udupi wish when inflation goes up,” he said.
The Reserve Bank of India meets Tuesday for its rate-setting meeting and is expected to raise rates and cash-reserve ratio to tackle inflation. Maybe another trip to Udupi will do the trick?
Source: WSJ.com: India Real Time