India faces near-term test, risk of stagflation low: Finance Ministry


New Delhi: India is facing near-term challenges that need to be handled carefully without sacrificing hard earned money. Macro-economic stabilityThe finance ministry said in its monthly economic report. He emphasized that the country was at risk Stagflation Because of his sanity Stabilization policies.
The May Monthly Report states that India is facing near-term challenges in its management. Fiscal deficit, Sustaining economic growth, curbing inflation and covering the current account deficit. This, while maintaining a fair value Indian currency.
“Many countries around the world, especially developed countries, face similar challenges. India is relatively better off with this climate due to its financial sector stability and the success of its vaccinations in opening up the economy. In addition, its medium-term growth prospects remain bright. Capacity expansion in the private sector is expected to boost capital formation and job creation for the rest of this decade, “said a report prepared by the Department of Economic Affairs.
“The world is seeing the potential for widespread stagflation but the risk to India is low due to strong policies,” it said. Both loose and Wholesale price inflation Is high but has strong growth prospects.
The report states RBIThe monetary policy of is now fully dedicated to curbing inflationary pressures. Inflation has been hovering above 6% for four consecutive months, raising the repo rate and withdrawing excess liquidity. At the same time, the government also shared huge withdrawals to control inflation by affecting duty cuts and targeting subsidies to protect the needy from inflation, citing measures taken by the Center to curb stubborn inflationary pressures.
The report said that imports of high retail inflation in India mainly contributed to the rise in global crude and edible oil prices. Locally, the onset of summer heat waves also contributes to the rise in food prices.
Going forward, however, international crude prices may soften as global growth weakens and opium supply increases. However, the timing remains uncertain and there is a risk of reversal in oil prices as OPEC supplies are not sufficient to match the shortfall caused by the possible withdrawal of Russian crude from the market. International edible oil prices could also fall as Indonesia lifts its export ban on crude palm oil exports and pledges to reduce export taxes to encourage shipments.
“Ultimately, the heat wave is slowly sending new crops to the market due to the expected timely arrival of the southwest monsoon, food prices and consequently headline retail inflation is expected to decline. Preliminary evidence of this was seen in May when retail inflation fell from 7.8% in April to 7% in May and food inflation fell from 8.3% to 8%, ”the report said.

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