“No unexpected jumps expected in inflation, may cool with monsoon: Economic advisor”
India's headline inflation is unlikely to see any unforeseen spikes and is projected to moderate closer to the Reserve Bank of India's target range with the advancement of the monsoon season, according to the country's Chief Economic Advisor V. Anantha Nageswaran.
Speaking at an event recently, the CEA stated that at present no scenarios bearing the risk of unexpectedly high inflation are on the horizon based on established forecasts. Wholesale prices have remained under control and food costs, a major driver of consumer expenses, are also expected to stabilize as rainfall activity picks up in the coming months as predicted. This could bring overall price rises back to the midpoint of RBI's flexible target of 4% plus or minus 2%.
The advisor further noted that previous investments in boosting infrastructure networks have positioned the economy well to maintain steady non-inflationary growth even when demand rebounds strongly. Core sectors like manufacturing have shown resilience to external disturbances so far.
Looking ahead, if ongoing recovery gathers further pace as anticipated, GDP expansion of close to 8% projected for the current fiscal could make it the fourth consecutive year of such high growth post pandemic revival efforts, Nageswaran observed. However, the full realization of projections depends on satisfactory monsoon distribution across the country.
Long-term prospects also appear bright given financial sector soundness and recent corporate sector deleveraging, opening possibilities for 6.5-7% annual increases beyond the next fiscal. Proactive labor and skill development alongside continual digitalization drives are equally important for sustaining this momentum.
