Govt working to rein in inflation, says FM

Inflation in India is slightly above the “tolerance limit” and the government is taking steps to control it, finance minister Nirmala Sitharaman said on Saturday. “Because we took a very calibrated approach, today we have an inflation which is slightly above the tolerance limit, but which is constantly being worked at so it can be brought down,” she said at an event in Karnataka.

The minister’s comments come at a time when, despite a moderation in inflation in recent months, the recent OPEC-plus decision to cut production and prediction of a subdued monsoon have raised fresh concerns over prices, besides the sticky milk inflation. However, the industry is keen on a message from the Reserve Bank of India that the interest rate cycle has peaked, as a section of it is part of a new capex cycle and others seek a consumption revival.

Retail inflation, measured by the Consumer Price Index (CPI), fell to a 15-month low in March and below the 6% upper tolerance limit of the RBI after remaining above it for two months, as prices of most items, particularly in the food basket, moderated and a base effect came into play. Wholesale price inflation fell to a 29-month low of 1.34% in March, aided by a sustained decline in commodity prices and a favourable base effect.

On April 6, the RBI announced a pause in interest rate hikes, breaking the spree of 10 continuous rate hikes totalling 250 bps in the past year. The central bank has said that it will observe the impact of existing rate hikes and then take a call on future rate decisions.

Recently, the minister said at an event in Mumbai that she would give the RBI its terrain as far the monetary policy is concerned. But she added that “the RBI is getting the sense from the ground and (of) the urge to move forward on growth (given) the indication that recession elsewhere and the US Fed rate cut could hit us. So, I think we should be confident that the RBI will take the right decision for the next round as well.”

RBI governor Shaktikanta Das had clarified the latest monetary policy decision was “a pause and not a pivot” as the monetary policy committee wanted to assess the impact of the cumulative 250 basis points hike in the policy rates since May, 2022.

Addressing another event in Karnataka, Sitharaman said India is facing multiple prominent external challenges due to fluctuations in global commodity prices and a recession in developed economies.

“The challenge is that many of the critical components which are very essential for the economy such as crude, fertiliser and some of the electronic components, which come from elsewhere, have to face the fluctuation in prices and supplies,” she said. The developed economies to which India largely exports are going through a recession. “So, these are prominent challenges India facing.”

On jobs, the minister said about 1 million central government posts are being filled up across the country by December.

(With agency inputs)

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