can u please advise wat was the inflation trend for last 5 years in indian economy.

Regards

Johnpaul

“On that point alone, isn’t it the case that the price of oil is pretty much constant in India (i.e. subsidized). One could say then, that inflation is artificially low.”

Well I think HmmBut has kind of answered part of this one:

“Gas prices are not part of “core inflation””

Normally food and fuel prices are considered to be “volatile” and hence not included in what we term “core inflation”, of course since these days the “volatility” is largely up, people may want to question this practice. The thing is we can still see large fluctuations in both food and fuel prices, and it is not necessarily for central banks to go chasing this shadow, now this way, now that. This could also introduce too much instability into monetary policy. It may be more interesting for them to follow (and close down) “secondary effects”, like wage rises, and public sector (institutional) prices.

It is interesting on the fuel front to think about how microeceonomics and macroeconomics to some extent diverge here. In micro terms these subsidies/controls make no sense, since they are simply distortions. In macro terms they may make some sense (depending) since violent movements in prices can provoke other effects, and it is not thoroughly illegitimate to use policy to cushion these (as for example the Bush administration US, who few would call “commie”, is trying to do with low income homeowners and the credit crunch, ie shield them from the full force of the short term price increase). Pragmatism is always important in macroeconomics.

It is my rather simplistic view that in the post Colonial/ post World War II era, India, given its poverty, deindustrialization, peculiar post-colonial identity and its mind blowing demographic diversity, under any other form of governance other than the (very flawed) democracy it has today would not have survived as we know it today. It would have, more likely than not, disintegrated into several failed and dysfunctional state lets perhaps in conflict with each other. Imagine Kerela and West Bengal as independent states (unreformed communist), or Tamil Nadu (Dravida fascist) or Bihar and UP (pure anarchies). And as a consequence the whole region would have been a whole lot poorer, weaker and inconsequential in the positive sense of the word (not unlike Pakistan, which is not inconsequential for the wrong reasons)

Contrasting this, on the other hand, given modern China’s cultural identity and remarkable demographic homogeneity, China could very well have taken a less repressive and more democratic (or democratizing) route to its development without having had to jeopardize its modernization and improvement of living standards of its people or its integrity as a Giga nation state over the long run. This more liberal route could have perhaps even helped her avoid the colossal, tragic and costly mistakes of the Mao-Communist period.

In short, in the grand scheme of things, India has done better than expected with what she was left with at the beginning of this era and her future looks better than it ever looked and China has done rather more poorly than expected, that even today its political future is still clouded and has still not escaped being lumped with India in discussions like this! That is ironic considering that India was so often ignominiously lumped with Pakistan to the chagrin of India’s elite.

“I regularly read the “Morgan Stanley Global economic forum” and they’re wrong about their predictions 50% of the time but at least they periodically go back and provide an explanation.
”

Yep, well we all are (wrong some of the time, I mean, to err is human). The best example I can think of is when Takehiro Sato apologised to readers for forecasting a rate hike which didn’t happen in January 2007. I think the big difference is that writers on the GEF are primarily economists who happen to be able to write, while on the Economist they are primarily journalists who are interested in economics.

“Why would you spend so much time dissecting someone else’s commentary?”

Because its influential I guess. If economics has become 90% about expectations these days, then what people think is going to happen in important, since it informs their decsision making. At any rate this is what the central banks spend most of their time telling us. On the other hand there does seem to be a big disconnect between the “hegemonic” economic discourse at the moment, and the way the investment community are operating, as becomes plain in the second part of my post (which I have just put up).

Also, I guess, because I am British, value the tradition the Economist represents, and resent the way it has been hijacked by the monocular crew that run it at present. Now if they gave me the editorial seat for a trial run……

As someone above indicates, they call themselves The Economist, but macro economics all to often gets pretty short shrift these days, its largely micreconomics that interests them as far as I can see. I’ll let you into a little secret: I almost failed the microeconomics units in my first degree. The whole subject has always bored me nearly to tears. But there you go, it takes all sorts to make a world.

Oh, yes, there is a third reason. Blogs have a very high Google ranking. Anyone entering the kewords economist and India now, just guess what they are going to find. Shame’em into being more careful and responsable in their work, that’s what I say.