This article appeared in The Times of India on April 21, 2013.
The price of gold, oil and many other commodities crashed last week. The stock markets zoomed and economists smiled, suddenly seeing positive consequences in three areas — inflation, the trade deficit and the fiscal deficit.
These three factors had earlier dragged down the economy to its lowest growth rate for a decade, just 4.7 per cent in the last quarter. But the global commodity crash should reduce inflation in India too, cheaper imports should shrink the trade deficit, and the fiscal deficit should shrink because oil and fertiliser subsidies will reduce. This is a triple helping of manna from above. Does it mean that the worst is over, and that the flagging Indian economy will now take off?
Read more: http://www.cato.org/publications/commentary/manna-heaven-or-new-recession
