A part of the government is not in favour of price control measures, member of the Economic Advisory Council to the Prime Minister (PM-EAC) Shamika Ravi said at Moneycontrol's Policy Next session on August 25. She added that such steps are not long-term solutions and may not be in place for an extended period of time.
Ravi's comments come at a time when the central government has taken a series of measures to keep a lid on food prices ranging from slashing retail prices for particular stocks of tomatoes via agencies, implementing a ban on export of a certain category of rice, as well as selling wheat under the open market sale scheme to bring down prices of essential commodities.
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Surge in vegetable prices and sustained cost pressures in key staples such as pulses and cereals drove India's headline retail inflation to a 15-month high of 7.44 percent in July. Economists expect inflation to remain above 7 percent in August too, data for which will be released on September 12.
Ravi also said that "not all inflation is bad inflation. Certain kinds of inflation also leads to redistribution within the economy and in this case it would be towards the producers." She added that India is past the phase when food security was a key concern and absence of a good distribution systems is causing the seasonal shocks.
On concerns around frequent measures to protect consumers ending up hurting farmers' interest, Ravi said that the income of farmers are far more stable right now. She cited that the government had infact attempted introducing the three farm laws, which were later withdrawn due to opposition, to protect the particular community from such shocks.
GDP Growth
On India's impressive performance in terms of GDP growth, Ravi said that though the country has achieved a growth level of around 6-7 percent in the past, similar growth rates in the midst of a global slowdown warrants optimism.
Ravi added that it is not surprising that many global agencies have been revising upwards their forecast for India's GDP growth. The International Monetary Fund (IMF) has raised its GDP growth projection for India for 2023-24 to 6.1 percent from 5.9 percent due to the blowout growth number for January-March.
Official data showed on May 31 that the Indian economy grew by 6.1 percent in January-March – well above expectations of 5.1 percent. As a result, the full-year GDP growth for 2022-23 is now estimated at 7.2 percent, 20 basis points higher than the statistics ministry's previous estimate of 7 percent.
For the current fiscal, the Indian government expects to maintain the momentum with GDP projected to grow by 6.5 percent even at a time when major economies of the world is going through a slowdown.
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