Deflation a challenge for industry, policymakers: Assocham

March 26th, 2009 - 6:58 pm ICT by IANS  

New Delhi, March 26 (IANS) With India moving towards deflation, demand creation will be a major challenge for policymakers as well as industry, a leading industry lobby group said Thursday.
“With inflation at 0.27 percent - the lowest in the last 30 years - it’s clear now that India is fast heading towards deflation,” Associated Chambers of Commerce and Industry of India (Assocham) president Sajjan Jindal said.

“Demand creation, therefore, will be a major challenge for policymakers as well as industry even though input costs for manufacturing will continue to go down,” Jindal added.

India’s annual rate of inflation declined for the eighth straight week and dropped to a historic low of 0.27 percent for the week ended March 14, as against 0.44 percent for the week before.

Jindal said the Reserve Bank of India (RBI) could take further monetary steps and reduce interest rates so that liquidity is infused to revive demand under current circumstances.

He was however hopeful that the current negative inflation would not continue much longer as the government has declared stimulus packages and significantly reduced duties, “which will definitely have impact in the next few months”.

“Till then, observance of patience is called for to avoid a panic situation,” Jindal said.

–Indo-Asian News service


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