The inflation numbers reported by the Govt. all read 4.5%-4.75% over the past few weeks. Is this for real or is PC(finance minister) selling dreams ?. Is India an economy with a stable 4%-5% kind of inflation?.
Well , if you are a house renting,petrol consuming,food consuming citizen, the answer is a big no. The published inflation numbers are just a bunch of badly calculated irrelevant numbers. All the while, even the savers are getting shafted with bank deposit rates lower than the actual inflation rate faced by the citizens. This is before the interest income is taxed. The post tax rates are worse. Of course, you can always deploy your savings in tax free schemes (up to a certain amount), but then you don't have liquidity anymore.
While the nominal GDP growth rates can be assumed to be reasonable ( or even conservative given that there is a fairly large black economy), the GDP deflator number used by the Govt. is likely to be as meaningless as CPI and WPI rates.
If we adjust for all this, the real "real GDP" growth rate is not 8% , but more likely around 6%.