1 week ago
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India’s consumption story is holding up and retail inflation is expected to slow to the 4%- mark on account of a favourable monsoon, Chief Economic Advisor (CEA) V. Anantha Nageswaran said on Wednesday, signalling that “nasty upside surprises” on the price rise front are not on the horizon for now.
“At the moment, inflation is well within the Reserve Bank of India [RBI] reference range [2% to 6%], and the expectation is that subject to the monsoon, it will continue to head towards the midpoint of the range,” Dr. Nageswaran said.
“We don’t see, at the moment, the scope for nasty upside surprises at this point. There can always be scenarios in geopolitics that can cause inflation to be more than what we expect but at this point, our baseline scenario is that the inflation gradually converges towards the midpoint of the target range in financial year 2024-25,” he added.
Speaking at a National Council for Applied Economic Research (NCAER) event, the CEA said that India’s economy is now well-poised to pursue growth without stoking inflation in coming years, due to supply-side investments in physical and digital infrastructure. The economy is better-placed to pursue non-inflationary growth unlike in the past when it would run into overheating issues every four-five years, he asserted.
Poonam Gupta, NCAER’s Director General, said India’s growth has become more resilient and shocks that mattered in the past have a lesser adverse impact on the economy now. “With clear electoral verdicts, policy risks have become less. Agriculture has become a little bit more decoupled from rainfall; large forex reserves have blunted the effect of flight of capital due to any global disruption; and cleaning up of the financial sector has led to faster credit growth,” she added.
