Let’s get our priorities right

Much concern has been expressed about the fact that growth has been tracking 6% or less over the last three quarters. But an even bigger source of concern should be the perverse growth-inflation mix. With growth below 6%, why is core retail inflation still running at 9%? Why is core manufacturing inflation still at the 5% mark? Shouldn’t it have completely dissipated by now if we were running such large negative output gaps for the last nine months? Much is made about the role of food inflation and the role of sharp increases in minimum support prices.

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