We Indians hate the T word.

A sudden deluge of good news on the economy. Helped by a weak rupee exports jumped 13.5% in October while imports, which have become more expensive, dropped by 14.5%. Consequently, the trade deficit fell to $10.55 billion compared to $20.20 billion in the same month last year. " We are confident of meeting the official export target of $325 billion ( for the fiscal year ), and if the trend continues we may even hope for a higher number," said Commerce Secretary, SR Rao. We will not spoil the momentary glow by remembering that China exports the same amount every month. The trade deficit was $90.68 billion in the first 7 months of this financial year which is $22 billion less than $112 billion last year. Our most revered Finance Minister proudly proclaimed that the Current Account Deficit will be $60 billion, which is less than the estimated $70 billion and much less than last year's $88.2 billion, quite forgetting that he is solely responsible for the dire state of the economy in the first place. Increased taxes have effectively reduced gold imports by 80%, from $6.85 billion last year to $1.37 billion this October. Total gold and silver imports are down by 12.8%, from $28.10 billion to $24.50 billion. Industrial production has grown by 2% in September compared to 0.6% in August and exports of agricultural produce, textiles, leather , handicraft and engineering have all increased. Why then has the stock market index, the Sensex dropped by 1000 points in the last few days while the rupee is down from around 61 to the dollar to 63.72 this morning, despite RBI support. That is because the Consumer Price Inflation was 10.09% in October, up from 9.84% in September while food prices increased by 12.56% in October compared to 11.44% in September. The consequences of wild inflation are 1. people will curtail non-essential spending on travel, eating out and buying cars 2. the rupee will fall in value as it buys less, which, in turn, will increase prices further and 3. the RBI will keep interest rates high which increases the borrowing costs of government and industries, hitting growth. But the proverbial bull in the china shop are figures from the US. In October 204,000 jobs were created in the US while the economy grew faster than forecast at 2.8% in the third quarter. This may signal the end of the bond buying program or the dreaded " tapering ". We are so terrified of the T word.