Budget 2012 - Merely a management game : Subir Roy

…….What is, however, most likely to happen is that the deceleration in the inflation rate witnessed in the last few months is likely to be halted, at least temporarily, courtesy the across-the-board rise in indirect taxes. Seeing this, the Reserve Bank of India is likely to go easy on any action to lower interest rates, in line with its inaction in the latest review of monetary policy. If we note that the deceleration in the growth rate over several quarters to as low as 6.1 per cent in the third quarter of the current year was critically due to the central bank’s anti-inflation policy of dear money — and that a cheap money regime may not arrive in a hurry — then how will the growth rate go up to 7.6 per cent next year from this year’s 6.9 per cent? And, without higher growth, what happens to revenue buoyancy and correction of the fiscal balance?.........

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