The great sage Mr. Montek Singh Ahluwalia, Chairman of the Planning Commission, has been silent of late. Normally he predicts everything from rainfall to food production to rate of inflation to growth of the economy. He had been predicting that inflation would would start falling ' next week ' but sadly it is just the opposite. Wholesale price index in April was 9.5% and food inflation is over 16%. With inflation so high, fiscal deficit at over 6% and the combined central and state government debt at over 100% of GDP one would think that the rupee would sink in value. In fact, the opposite has happened. The rupee has strengthened against major currencies. One dollar now buys Rs. 45.25 and one pound sterling is down to Rs. 65.75. One reason may be because of high interest rates in India as opposed to near zero in the US. For Non Resident Indians it makes sense to keep money in India to earn higher interest. Foreign Institutional Investors or FIIs have been pouring money into the stock market which has doubled in value since the last year. The government probably feels that the strength of the rupee helps in keeping inflation in check by reducing cost of imports, especially oil. In fact, there is very little the government can do. Increasing interest rates further will bring down the growth rate. Having wasted money by increasing public sector pay and forgiving loans to farmers to win the last election it is desperate to collect higher taxes. It had to increase indirect taxes thus stoking inflation. All that the Congress can do is pray for a good monsoon to bring down inflation and that the hot money does not take flight because of external factors. The Congress has brought us close to bankruptcy many times before. It will do anything to stay in power never mind the consequences.