Stating that the Reserve Bank of India’s revision of the GDP growth estimate for the current fiscal to 7% reflects ‘a very well-placed assessment’, economic affairs secretary Ajay Seth on Friday said the government would continue to take supply-side measures to contain food inflation.
“We are some distance from 4% (inflation target), some variation from month-to-month basis can happen and that can be on account of either base effects or any particular commodity prices temporarily going up because of some supply-side issues. Supply-side measures have been taken for food products and will continue to be taken,” Seth said, on the sidelines of an event organised by Ficci.
In its monetary policy review on Friday, the RBI has maintained its inflation projections for FY24 at 5.4%, foreseeing a gradual alignment of quarterly headline inflation towards its 4% target by Q2FY25.
The near-term outlook, however, is masked by risks to food inflation which might lead to an inflation uptick in November and December, RBI Governor Shaktikanta Das said.
Global concerns also persist with the uptick in sugar prices. To increase the availability of sugar, the government on Thursday announced that use of sugarcane juice for ethanol production would be halted.
The RBI has expressed a sense of optimism regarding the growth momentum, which is evident from its upward revision of the FY24 growth forecast to 7% for FY24, up from the earlier projection of 6.5%.
“(Given) the growth India has achieved in the first half of the year and then in the two months in the current quarter, this upward revision (RBI) is well placed,” Seth said.
He said high-frequency indicators are showing good momentum. High-frequency data has underscored a robust acceleration in economic momentum, supported by the impressive performance of eight core sectors, capacity utilization levels exceeding long-term averages, resilient GST collections, heightened festive demand, and substantial growth in investments in fixed assets by listed private manufacturing companies.
Enough resources with private sector: CEA
Speaking at the same event, Chief Economic Advisor V Anantha Nageswaran said India’s growth can accelerate if private sector capital formation improves. “Investment activity that we will undertake will make a big contribution to dissipating uncertainty. There are enough resources with the private sector,” he said.
Structural changes that may come in the way of private investment are being addressed with a continued push to infrastructure, easing of compliance burden, and facilitating access to critical technology and raw materials he added.