A top Indian economist said the Indian experience in dealing with inflation is a model for Sri Lanka. A top Indian economist said the Indian experience in dealing with inflation is a model for Sri Lanka. He says there are many similarities between Sri Lanka’s current macro indicators and those of India in the mid-nineties.
Since then India reduced reliance on debt short-term debt, while encouraging foreign direct investment.
Over the last decade or so Indian government have been able to reduce inflation to below five percent.
However a top economist from India’s Central Bank says volatility in prices is as bad as high prices.
“Volatility in price creates uncertainty in economic decision making,” says Dr. Narendra Jadhav, Chief Economist, Reserve Bank of India.
Inflation has been both high and volatile in Sri Lanka in the last couple of years.
Prices went up starting in mid 2004 as government started to print money to finance populist subsidies aimed at winning elections.
Inflation created by loose fiscal management hurts the segments that governments promise to protec