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value of a 1978 corvett

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Q: Dollar value 1978
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Deflation in India Deflation and Indian Economy?

Indian economy has slipped into deflation for the first time in over 30 years, the last time being in March 1978. The question that immediately arises in one's mind is whether deflation brings with it all the negatives associated with it and also whether it is an indication of an economy perilously close to recession. Facts however paint a different picture than the expected outcomes and indicators. For one, the falling wholesale prices are not accompanied by contracting demands. This itself is an assurance that the economy is still healthy. Ashok Chawla, a Finance Ministry top official, assuages fears saying the price drop did not signify deterioration in India's overall economic conditions, and would not lead to any shift in economic policy. "These numbers do not reflect any contraction of demand," he said. "In fact, we are doing well and the country is on the path of improved economic performance." Meanwhile a study done by Citigroup indicates that the declining price levels are largely statistical and caused by the sharply lower fuel prices and that inflationary pressures remained. In fact the economy is predicted to be back to its usual inflationary mode by December. "You will see negative numbers for the following weeks, but by year-end we do expect inflation to go back to around 4 per cent," says Rohini Malkani of Citigroup. Reserve Bank of India Governor D Subbarao feels there is no risk of deflation as India doesn't suffer from demand constraints. He added that there also are several other indicators to monitor inflation and not just the wholesale price index. And some of these other measures show that prices of food and primary articles are still high. The RBI Governor said it was important for stimulus plans to work through fully and that they have had some effect on parts of the economy, such as steel, cement, two-wheelers, cars, cargo and freight traffic. About the right course of action, it has been mentioned above that the Citigroup report pinned blame on fuel prices for deflation. The government recognized this fact and was also tempted to hike fuel prices not just to combat deflation but because international crude prices have been inching up. The lesson for consumer then seems to be: Shelling out more for petro products was only on expected lines.

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