India shows fiscal restraint in face of inflation

Prior to India's Budget, there had been considerable speculation about the extent to which finance minister Pranab Mukherjee would pander to populist demands.

The government faced pressure on a number of fronts but most notably the impact of inflation which is affecting the living standard of the average citizen, as well as causing some foreign investors to pull out of emerging markets generally in recent months. While inflation has been a global theme in 2011, the situation in India has been particularly acute with rates on India’s Wholesale Price Index running at 8% and food price inflation even higher at 13%. This is despite the fact India is among the largest producers of food in the world and its arable area is 48% of total land compared ...