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Economic Survey 2022: Measures to cool global inflation to affect capital flows, pressure exchange rate

India will need to be wary of imported inflation, especially from elevated energy prices, and likely withdrawal of liquidity by major central banks, the survey warns

January 31, 2022 / 06:01 PM IST
Representational Image.

Representational Image.

The impact of surging inflation, particularly in the US where it has risen to its highest since 1982, is hard to miss as one reads through the Economic Survey 2021-22.

The annual economic report card authored by principal economic adviser Sanjeev Sanyal and his team of advisers has warned that India will need to be wary of imported inflation, especially from elevated global energy prices.

The likely withdrawal of liquidity by major central banks over the next year may also make global capital flows more volatile, the authors wrote.

“Inflation has reappeared as a global issue in both advanced and emerging economies. The surge in energy prices, non-food commodities, input prices, disruption of global supply chains, and rising freight costs stoked global inflation during the year,” the survey said.