Inflation to Rise Post Hikes

Yesterday we reported about the hike in petroleum products and excise duties. Post-hike, the Wholesale Price Index is expected to rise by 55 bps only on account of the hike in these 3 products.

The hikes also meant increase in consumer’s burden by Rs211 bn (US$4.9 bn or 0.39% of GDP) and the government will bear tax losses amounting to Rs226.6 bn (US$5.3bn or 0.42% of GDP) in F2009 (12 months ended March 2009).

The combined central plus state deficit including the off-budget expenditure items is expected to be about 8.9% of GDP in F2009 (from 9.3% earlier).