The Indian economy is facing inflation threats several attempts to capture this inflation demon has failed i.e. by increasing bank rates several times in past few quarters did not even work. The middle east political instability and war in Libya has affected Crude oil prices a major ingredient in industrial process the government in this budget is now proposing 100% FDI investment in multi brand retail to trap inflation but Pranab Babu is not aware that our's is the nation where people prefer consuming fresh vegetables Eg; Tomatoes the affordable price for a common man is Rs. 20 per kg instead of buying a tomato puree available at a similar price form a retail store. So promoting 100% FDI investment in multi brand retail chain where we get hybrid stored vegetables at lower prices will not make much impact on inflation.
Oil subsidy may make some impact on on inflation provided middle east issues are resolved but if not resolved the prices of crude oil will rise and industries will have to spend more on their transportation expenses since prices of petrol and diesel will rise so this will trigger rise in prices of products and again the inflation wins over several strategies to trap it.
The fact is our economy is moving from growth and recovery stage to boom stage where prices of every thing will rise be it real estate or gold, silver, stocks and other assets. The boom period starts for Nov 2011 and will last till the economic bubble can inflate.
Conclusion inflation will continue to rise irrespective of all measures to trap it and there will be opening for the bond market which is the safest investment in boom to burst phase.
KHP
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