Former World Bank chief economist Kaushik Basu has said that India's wholesale price-based inflation is at a 30-year high, leading to a very alarming situation for the country. He, however, doesn't see any risk of hyperinflation, but cautioned that if retail inflation follows wholesale prices, it might lead to ‘inflationary crisis’.
Basu said ‘there is a big risk of inflation and actually one particular kind of inflation. If you look at wholesale price inflation in India. Right now it is at a 30-year high’. Basu also said generally wholesale price inflation seeps into retail price inflation, so that this is a very alarming situation for India because prices are rising quite rapidly.
Stating that India needs a much better curation of policy once again between the Reserve Bank of India and the finance ministry, he said, ‘I feel not enough is happening once again between the Treasury, the finance ministry and the central bank for the inflation.’ He cautioned that there is a big risk of inflation going to be higher, though not huge. He opined 'I don't think there's any risk of hyperinflation or anything like that in India’. He observed ‘but it can go higher and if the retail prices begin to follow the wholesale prices, it is a major inflationary crisis, already, because the poor people have been hit so badly by the crisis.’