Raise competitiveness while low inflation persists: NCAER | business | Hindustan Times
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Raise competitiveness while low inflation persists: NCAER

business Updated: Aug 02, 2009 13:15 IST

India should take advantage of the current low inflation regime, which may not last long, to implement policies that raises the economy's competitiveness, economic think tank NCAER said in a report.

"The significant decline in the overall inflation rate... has provided opportunity for government to implement policies in an inflation free environment," the National Council for Applied Economic Research said in its July report.

The annualised rate of headline inflation, measured in terms of Wholesale Price Index (WPI), has entered into negative territory after being consistently hovering around one per cent level for three consecutive months.

"The current trends provide a benign opportunity for adjustments in the economy to achieve greater competitiveness," it said.

The lower inflation rate is also a stimulus to export performance and at the same time leads to stiffer competition to imports, the city-based think tank said.

"However, the window of low inflation may not be open for long," it said adding there is a possibility for an uptrend in inflation rate once the 'base effect' wears out.

Inflation is unlikely to stay at current low levels, it said. The RBI's interest rate cuts and government's fiscal stimulus packages has left enough liquidity in the system that may re-activate the inflationary pressures.