India can curb its inflation in the current international climate of ‘peculiar stagflation' and in the context of activism by the Group of 20 (G-20) countries, according to Kaushik Basu, Chief Economic Adviser to the Government of India.
Answering questions after speaking at a forum here on Tuesday, Dr. Basu said: “I feel pretty confident that Indian inflation will be curbed with a combination of three things — fiscal measures, monetary measures, and supply management.” With monetary and fiscal measures initiated over the last year, supply management was now possible “if you can bring more goods onto the market.” In essence, “it is a combination of demand-and-supply management,” he said, pointing out that he was now leading “a committee which actually looks at both sides.”
On the global context for India's inflation, Dr. Basu said: “Unlike on earlier occasions when you would see an idiosyncratic inflation-behaviour — it happens at one country and doesn't happen in another country — what we are seeing, certainly over the last six or seven months, is [a new phenomenon] just across the board. Virtually all emerging economies are inflating and industrialised countries are not growing. So, it is a very peculiar [kind of] stagflation — ‘stag' in the industrialised countries and inflation in the emerging countries. Once it begins to happen, you realise that you have to fight, with [the help of] your monetary policies and your fiscal policy. We are doing that. But beyond a point, there are limits to what you can do. So, you need some [international] coordination, and the G-20 is the forum where you have to think in terms of coordination of monetary and fiscal policy across countries.”
On the prospects for public-private partnership in India, he said “one area where we are hoping that there will be a further stepping-up is the infrastructural building activity, especially over the next five-year plan — both in raising funds and in executing larger infrastructure projects.”
At the forum on ‘Disinvestment and the Indian economy,' organised by India's High Commission and the Singapore-based Institute of South Asian Studies, Disinvestment Secretary Sumit Bose outlined the more immediate agenda in this domain. High Commissioner T. C. A. Raghavan said the idea was to focus attention on the disinvestment road map in the context of the changes taking place in the Indian economy. ISAS Director Tan Tai Yong moderated the discussions.