Good monsoon rainfall notwithstanding, it is hard for domestic food prices to stand apart when global prices are trending up. Lead indicators show that economic activity is weakening—a situation that normally requires policy supportPressure on monetary and fiscal policy in India seems to be increasing. Let’s start with monetary policy. At this juncture, it is likely that the government will reduce taxes and duties when oil prices are climbing than pass them on to consumers. Persistence of food inflation could push this up more by influencing inflationary expectations.

Source: Mint June 14, 2016 10:07 UTC