Reflation for the US transforms to inflation for India.

"An economic rebound as brawny as the one projected this year ought to be a cause for celebration. It's a relief that gross domestic product (GDP) will enjoy its biggest spurt in years -- perhaps even decades -- following the biggest drop since the 1930s," Daniel Moss wrote about the US economy. Problem is, "that the US is exporting reflation. Bond yields around the world have climbed the past few months on expectations that prices will pick up. Of course they will." "What's probably happening now is that, rather than an inflation problem, we are seeing some of the deflationary forces disappearing." "US consumer prices for March are due out Tuesday and markets are ready to scour the data for signs that massive stimulus spending is spurring inflation." reported Reuters. "Analysts see consumer prices rising by a median 2.4% for March year-on-year, up from 1.7% in February." What's worse is that GDP growth is expected "to rise as much as 20% year-on-year, setting China up for a nearly double-digit 2021 expansion thanks to a resurgence in global manufacturing and a sharp recovery in domestic spending". On the other hand, "India, which is projected to grow at an impressive rate of 12.5 percent this year, needs to grow at a much faster pace to make up for the unprecedented contraction of eight percent that it clocked during the COVID-19 pandemic in 2020, according to a senior IMF official." But, how? What is reflation for the US is inflation for India as "The Reserve Bank of India (RBI) on Wednesday revised upwards the CPI-based retail inflation to 5.2% in the first half of the current fiscal year." Low inflation forecast allows the RBI to indulge in financial repression. "Government securities (G-secs) worth nearly Rs 11,000 crore (Rs 110 billion) remained unsold in the first gilt auction of fiscal 2022. This indicates a revival of a tug of war between traders, who want higher yields, and the central bank which wants the opposite." The RBI wants traders to suffer losses to appease the government. Meanwhile, the number of new coronavirus infections rose to 152,879 yesterday as states began to impose ever increasing restrictions on hapless citizens. Terrified by their inhuman experience last year, "The second wave of Covid infections is sparking another reverse migration of workers returning to their home states from places reporting sharp increases in cases," reported Times of India (TOI). Will prices jump because of falling output, or fall because of rising poverty remains to be seen. "One of the key reasons cited for the slowdown in factory output is the increase in input costs -- the rate of input cost inflation was among the highest seen in the past three years," reported India Today. If manufacturing in China grows as forecast input costs can only rise higher. The Indian government has been adding massively to input costs as, "The collections on petrol and diesel rose to Rs 2.94 lakh crore (Rs 2.94 trillion) in the first 10 months of the current fiscal (2020-21) according to information furnished by minister of state Anurag Singh Thakur," reported TOI. This despite a massive 9.1% contraction in demand for fuel in the financial year ended 31 March, because of over 300% increase in taxes on fuel. Of course, five times higher inflation in India compared to the US means a loss of buying power of the rupee compared to the dollar. "The fall of the rupee has caused unease in the market," wrote Aparna Iyer. This will make imports more expensive and further add to inflation. Reflation in the US will transform to inflation in India. All because of the RBI.