Mumbai, May 13 (Agency) The Finance Ministry on Thursday said the measures taken by the government and the RBI were expected to moderate the inflationary pressures. In its monthly economic report, the Ministry noted that the inflation trajectory will be influenced by global factors. The CPI inflation during FY 2021-22 averaged 5.5 per cent, 50 basis points below the upper limit of the RBI Monetary Policy Committee’s inflation band, and lower than 6.2 per cent for FY 2020-21.
“While inflation is expected to be elevated in 2022-23, mitigating action taken by the Government and RBI may reduce its duration,” the report said. In its recent off-cycle meeting, the Reserve Bank of India announced a 40 basis points increase in repo rate to 4.40 per cent, after almost four years, to tame the elevated inflation. According to the Ministry, the channel of imports, elevated global crude and edible oil prices now have a significant impact on India’s inflation outlook. “Government measures to keep the prices of these commodities in check along with the recent hike in policy rates by the RBI are expected to temper inflationary pressures in the economy.
However, inflation trajectory in the coming months will be influenced more by the geo-political situation, international commodity prices and supply chain management,” it added. Noting that inflation in India has a lesser impact on low-income strata than on high-income groups, the report observed that since aggregate demand was recovering only gradually, the risk of sustained high inflation was also low. “Notwithstanding the presence of inflationary headwinds, the capex-driven fiscal path of the government, as laid down in budget 2022-23, will help the economy post a near eight per cent growth in real GDP for the current year,” it said.