Inflation and Monetary Policy

In News: India is not out of the woods on inflation management, with inflation in August at 7% and the wholesale price index (WPI) at 12.4%.

• However, in comparison with the US and most European countries, where inflation is higher (8 to 12 per cent), India has done fairly well. Pakistan has an inflation at 27 per cent, and Sri Lanka at 64 per cent. On average, during 2004-05 to 2013-14, inflation averaged 7.9% (and GDP growth was at 7.7 per cent) and during 2014-15 to 2022-23 it’s 1% inflation but GDP growth at 5.6% has been poorer.
• It seems that GDP growth is likely to come down a bit lower than the RBI’s earlier forecast of 7.2 per cent, and the IMF’s 7.4 per cent. If India manages 7 per cent GDP growth along with 7 per cent inflation in 2022-23, it would still do fairly well, though that is not the most desirable outcome.

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Source:  Indian Express