New Delhi: Unabatedly rising challenges for the UPA government on economic front are adding to its woes. After the slow growth rate of exports and industry output, the high rate of inflation released on Monday are posing serious challenges for the government once again. Inflation touched the level of 7.26 percent in April. Along with the petroleum products, milk, eggs, meat, fish and fruits contributed to the rise in inflation. 

Growing figure of inflation has made it quite difficult for the government to achieve its targeted economic growth rate. The government anticipated lower inflation numbers and also expected to fuel up the economy with the recent cuts in interest rates by RBI. On the contrary, the government is faced with adverse economic scenario. Now it will be difficult for the RBI to further cut the interest rates. Now it is believed that loan rates for industry will go up further. Hence, the industry will also be facing difficulties on expansion front.

The international credit rating agency Standard and Poor’s (S&P) has already downgraded the credit rating to negative on account of country’s inability to maintain the pace of economic growth rate.

Rupee is also not helping the cause as it is still declining against dollar. It has even created an all time low price recently. If it continues to fall in the same manner then it can put inflationary pressure on the economy. 

However, Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan believes that to check the declining rupee, forex reserves can be used. The government has the challenge to maintain the fiscal balance. On the issue of cutting subsidy on fertilizers and petroleum, the government is due to take certain steps in this direction.

Prices of food products are becoming exorbitant and it is causing worries for the government. It has breached the level of 10 percent again. Manufacturing products and edible oil prices have surged and triggered inflation in April.  


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