Deflation will be good for the economy in the shorter period: PHD Chamber

Deflation will be good for the economy in the shorter period: PHD Chamber

Deflation will be good for the economy in the shorter period: PHD Chamber

 

No.PR-199
February 16, 2015
New Delhi
 

Deflation will be good for the economy in the shorter period: PHD Chamber
 

Mr. Alok B. Shriram, President, PHD Chamber while commenting on inflation, which is now in the negative trajectory, said it will be demand inducing and a major relief for the manufacturers.
 

Since WPI (wholesale price index) in India mainly reflects the costs of production of the manufacturers with at around 65% weight of the manufactured products in WPI containing mostly basic and intermediate goods which are used in the manufacturing processes, the costs of manufactured goods is expected to decline further. 
 

Going ahead, lower WPI inflation will impact production process positively and enhance the domestic demand scenario vis-a-vis low priced availability of goods, added Mr. Shriram.
 

The drastic fall in the crude oil prices is a significant factor impacting positively the fall in inflation, he said.
 

At this juncture, a significant rate cut by the RBI becomes inevitable to boost up the demand scenario vis-à-vis easy availability of credit to the various consumers and producers’ segments.
 

We expect at least 100 bps cut in the repo rate before entering the new financial year 2015-16, said Mr. Alok B Shriram.
 

ENDS

Koteshwar Prasad Dobhal
Consultant (PR)