Could increased spending lead to increased deficits which will increase inflation domestically?
Prime Minister Singh: Honestly domestic inflation arising as a result of increased spending on agriculture is not right now a big concern. We have in our country very sizeable food reserves. We have a foreign exchange reserve stock of about $120 billion. If we are able to convert that increased spending into a larger import surplus there is no basis for the fear that increased spending of the type that I have in mind would lead to any bout of inflation. In our country, food prices are the kingpin of the price structure. So long as our agriculture does well, so long as we have ample stocks of food grain, so long as we have foreign exchange to import food grains when theres a deficient market, I think we can control inflation. I have no reason to doubt about our ability to contain inflation despite increased spending. But I have worries about this situation: Overall the fiscal deficits of the center and the states of about 9-10% GDP are very high. I think the burden of debt and particula
