Inflation rate maybe the same but India is not the US.

"The nosedive in consumer price inflation to 1.5% in June prompted Arvind Subramanian, the government's chief economic adviser, to talk of a paradigm shift in the inflationary trajectory," wrote M Chakravarty. Not just in India, CPI for June fell to 1.6% year-on-year (y-o-y) in the US, the fourth successive month that it has fallen. In China CPI for June was 1.5% y-o-y, "well below the government's 3% target" and in Japan the CPI for June was 0.4%, "way below the target of 2%". This seems to be a long term trend globally. Why? Because the price of oil is down and likely to remain so. The OECD-FAO predicts that "real prices of agricultural and fish commodities are anticipated to follow a slightly declining trend, keeping them below previous peaks over the next 10 years." Bad news for Indian farmers who cannot export their way out of trouble in the event of a bumper crop, wrote R Kishore. The Bank of International Settlements has pointed to suppressed wage inflation because labor has lost its bargaining power as manufacturing has shifted to low wage countries in Asia and because of the rise of automation. In the case of India, the present government has changed the base year for calculating retail inflation to 2012, when the average rate of CPI was  9.3%. While the rate of CPI was almost the same between the US and India in June the difference is that the interest rate in India was left unchanged at 6.25% by the RBI in June, while the Federal Reserve increased its Funds Rate by 25 basis points to 1.25% in the same month, a difference of 500 basis points. Why the difference? India has a history of high inflation because of limitation of supply. Food and beverages make up a large part of our consumption basket and agriculture is largely dependent on monsoon, which is unpredictable. The government runs fiscal and current account deficits which are plugged by borrowing from the market. Government debt has reached 46% of GDP and 77% of its borrowings are used to pay interest on existing debt. The central government has reduced its deficit to 3.5% of GDP but states are having to borrow more to pay off loans to farmers. A decade of near zero interest rate has resulted in household debt reaching an eye-watering level of $12.7 trillion in the US, which is 6 times the GDP of India, while the federal government has a debt of $19.9 trillion. The US can print dollars, which is the reserve currency of the world, but if India prints rupees then the value of the rupee will fall. The stock market is in record territory, with price/earnings ratio at a record 23.11%. A hefty cut in interest rate could see a fall in the rupee and an outflow of foreign funds which will result in a crash in share prices and also in the value of the rupee. The US, Japan and Europe want inflation to rise, do we?