Anand Krishna’s musings

Marie Antoinette and her family paid a very heavy price for her naive comment on the common people of France in around 1789. I shudder to think of the modern day equivalent in India- which is probably the Maoist/naxal attacks one reads about in the newspapers almost daily. Thanks to the drought in Australia, India is finding it hard to import wheat. And why should we import wheat? Simply because we are not growing enough of it at home in India. Thanks to the cartel (OPEC), which is not willing to increase production and hence supply of crude, oil/petroleum prices remain on an upward trajectory. Today, crude is selling for about $120/bbl- nearly 2.5 times the price it sold for a little over 12 months or so ago. Not surprisingly, inflation is on the rise. The official figures peg it at over 7% but if you consider the typcial urban middle class basket of goods, I am sure the figure is closer to 12%. High inflation means higher interest rates, which mean tighter credit availability, which means slower growth. And to top it all, elections in key states like Karnataka are just round the corner, with Lok Sabha elections also less than a year away. Consider the slowdown in the US and Europe and the effect this is having on the Indian IT/ITES sectors and you know why Dr Manmohan Singh and Mr P Chidambaram are worried. I just hope that for all our sakes, the monsoon is normel- and timely.