[dropcap]F[/dropcap]ew of us would have been aware of it, especially in an economy at an all time inflation high of 10%, but wholesale inflation rate moderated to 5.20%, in April from 5.70% in March, driven down by a sharp drop in vegetable prices.
Now the bad news – and why global warming, climate change our attitude to environment challenges, sustainable development plans , cannot be the concerns of policy makers alone …by all indications, the price situation of food is poised to get worse, given a higher likelihood of deficient rains this summer.
Global and domestic meteorological agencies have forecast a sharp increase in the likelihood of an El Nino weather pattern this year, which can shake up global weather and trigger a poor monsoon in India, potentially posing an immediate challenge for a new government set to take office in the next few days.El Nino — ‘little boy’ in Spanish — is a climate glitch marked by higher sea-surface temperatures in the equatorial Pacific. Its effects can ripple globally, from storms in California to leaving Australia and India at greater risks of a drought.
The retail inflation data, which was released on Monday, has already shown that food prices have begun to rise again. The retail inflation rate jumped to 8.6% in April from 8.3% in the previous month as the food inflation rate rose to 9.8%.
For the incoming government, this isn’t quite a happy situation to be assuming office. Its immediate task would be to revive growth, which has slipped into sub-5% levels.
The question being asked is how will the “Gujarat Model”, in which Modi was able to sustain a 13.8 per cent compounded GDP rate over his 10 year tenure as the Chief Minister, over the national average of 7.8 per cent GDP growth rate tame inflation?
The challenges before the new government, will be deal with four macro-economic challenges -- growth, inflation, fiscal deficit and current account deficit.
This is also the first time in a quarter of a century that India’s economy would grow at below 5% in two successive years.
