The International Monetary Fund said thatIndia growth may have a decade-low after the decrease of the investment. The Washington-based lender said in its World Economic Outlook report that the GDP of India will rise 4.9 percent in 2012, less than a July forecast of 6.1 percent.

“The outlook for India is unusually uncertain,” the IMF said and they won’t change the monetary policy until a sustained decrease in inflation materializes. India’s government began to expand the fiscal deficit to “permit more investment from abroad triggered a surge in the rupee and buoyed stocks” (Kartik Goyal).

Inflation is always a serious problem for countries. Inflation can directly “cause an increase in the poverty incidence of a country and indirectly cause higher unemployment rates” (sowwireguy1). Governments try to solve the problem by their intervention, such as “resort to various acts” and “lift certain import controls” (sowwireguy1). Actually, the government plays a significant role in the fight against inflation. So, sometimes compared with just let the market heals itself, allow the government intervention may be a better option.

Works Cited:

-Goyal Kartik, Bloomberg, Oct 8, 2012,

http://www.bloomberg.com/news/2012-10-08/india-growth-to-drop-to-decade-low-amid-high-inflation-imf-says.html

-Sowwireguy1, Hubpages,N.D,

http://sowwireguy1.hubpages.com/hub/How-To-Solve-Inflation