Inflation likely to be below 6% in FY24, says fin min source

Informist, Friday, Apr 21, 2023

By Priyasmita Dutta and Sagar Sen

NEW DELHI – Inflation in the country in the ongoing financial year is likely to be just below the upper bound of the Reserve Bank of India’s tolerance band of 2-6%, a senior finance ministry official said today.

“Inflation will remain at the current levels most of the year…there may be temporary blips, but it won’t go up any further,” the official told Informist. “I don’t think inflation will go beyond 6% in 2023-24, unless there is a global crisis.”

India’s consumer price inflation fell to a 15-month low of 5.66% in March, mainly due to the statistical effect of a high base. For Jan-Mar, CPI inflation averaged 6.2%, 50 basis points above the RBI’s projection for the quarter. For 2022-23 (Apr-Mar), it averaged 6.7%, 20 bps higher than the central bank’s estimate.

Earlier this month, the RBI had scaled down its inflation forecast for the current financial year by 10 basis points to 5.2%. It also said that the “war” against inflation had to continue until it was close to the target.

While the finance ministry official said the government was keeping a keen eye on inflation, bringing inflation close to the targetted 4% level is the RBI’s mandate.

For Apr-Jun, the central bank has projected CPI inflation to average 5.1%, up 10 bps from its previous forecast. For Jul-Sep and Oct-Dec, its inflation projection has been retained at 5.4%. The RBI lowered its inflation forecast for the last quarter of 2023-24 by 40 bps to 5.2%.

Inflation will assume importance as the country approaches the 2024 general elections, with the government trying to strike a balance between growth and inflation.

The Economic Survey for 2022-23 pegged GDP growth in 2023-24 at 6.5%, driven by solid domestic demand and a pick-up in capital investment. The RBI also estimates India’s GDP growth in 2023-24 at 6.5%. End

Edited by Avishek Dutta

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