Indian Decade

India’s Inflation Woes

Do rising prices and an increasing interest in firms investing overseas suggest the shine is coming off India?

Last weekend, we hosted two close friends—an Indian couple who live in San Francisco but who are in Delhi for their annual month-long holiday. Both of them are extremely successful professionals—the husband worked for Sun Microsystems for years before moving to one of those niche high-potential technology start-ups that define Silicon Valley, while his wife is a qualified accountant who deals with auditing for major companies.

The two of them take home a combined monthly paycheque that’s impressive in any country. So I was surprised to hear them complain that since they’ve been back in Delhi they’ve found shopping here surprisingly difficult, because it’s just so expensive these days.

They said they’d been hoping to pick up some furnishings, carpets and other items for their new home. But despite the stuff being ‘lovely’, they said time and again that they’d been shocked by the price tags.

It's something many of us in urban India have had to get used to. Sometimes it feels like we’re paying more for comparable items than people are paying in London and New York. Inflation seems to be a never ending problem here—it climbed to more than 8 percent in December—and there’s now some disquiet in Indian business circles as concern grows that things just don't look as good as they did just 12 months ago.

Times of India columnist Swapan Dasgupta summed it up well in an interesting piece at the end of last month when he talked about how Indian firms are increasingly casting their eyes overseas for opportunities.