High inflation concerns Ratan Tata

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High inflation concerns Ratan Tata
Growth of the economy is highly correlated to the inflation. Constant rate hikes to overcome sticky inflation might affect many sectors of the economy.

Ratan Tata, Chairman of Tata Group warned that rising inflation could cause another major slowdown in emerging economies like India and China.

“Inflation is indeed a lurking enemy of healthy growth and needs to be controlled," he mentioned in Annual Report for 2010-11.

He addressed shareholders that, "The resulting high interest rates, tighter credit regimes and higher fuel costs will dampen consumer demand for a range of consumer products including automobiles. The quarterly growth figures in Asia have been declining during the year and it is expected that both China and India will register lower growth rates in 2011-12. Automobile sales have already started to decline in India. There has also been a decline in automobile sales in China for the first time in two years."

India and China have witnessed a robust growth compared to other economies like U.S and Europe who are struggling hard to come out of crisis. So at present, health of world economies is highly dependent on health of Asian economies which are on the growth ladders, he mentioned.

He also added, “It is hoped that a realistic balance will be achieved in the Asian countries to ensure that these countries continue to be the drivers of growth, innovation and prosperity for millions of their people as also both sources and markets for the rest of the world."

Asia could see general slowdown in industrial activity compared to the growth rates achieved over the past few years which could drop the consumer demand for goods and services in return, he said.

The Annual Report also said that the company would continue to keenly focus on international markets and expected to launch its product range in many of its markets. As a part of this strategy, an assembly plant in South Africa is being set up and is expected to start production next year.

OneIndia Money

Read more about: inflation, tata, economy, automobile
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