6.8% inflation is not too high to stop people from buying things for themselves or to make people less likely to invest: Economic Survey

The Economic Survey said on Tuesday that the RBI’s prediction that retail inflation will be 6.8% in the current fiscal year is neither too high to stop private consumption nor too low to make people less likely to invest.

But persistent inflation could make the tightening cycle last longer, which would mean that borrowing costs could stay “higher for longer.”

Nirmala Sitharaman, who is the Minister of Finance, put the Economic Survey 2022–2023 on the table in Parliament. The Survey talks about the current state of the economy and gives a sneak peek into the future.

India’s retail inflation went below 6% in November after being above RBI’s upper tolerance level for 10 months, starting in January 2022.

Last year, the central bank said that inflation would average 6.8% in the current fiscal year and then go down in the next fiscal year.

“RBI thinks that the overall rate of inflation will be 6.8% in FY23, which is above its target range.” “At the same time, it’s not high enough to stop people from spending their own money, and it’s not low enough to make people less likely to invest,” the Survey said.

The Reserve Bank’s job is to keep inflation at or below 4%, with a range of +/-2%.

Wholesale and retail price inflation in India stayed high for most of 2022. This was mostly because of problems with the supply chain caused by the Russia-Ukraine war that started in February 2022.

Russia and the Ukraine are two of the most important places where important agricultural goods like wheat, maize, sunflower seeds, and inputs like fertilisers are made. Together with other countries that border the Black Sea, they feed the world.

The Survey said that “entrenched inflation” could make the tightening cycle last longer, which could mean that borrowing costs will stay high for longer.

“In this case, the global economy may have slow growth in FY24,” the report said.

But in the case of slow global growth, there are two bright spots: low oil prices and better-than-expected CAD (Current Account Deficit).

“Overall, the outside situation will stay manageable,” the report said.

In December, retail or CPI inflation fell to its lowest level in a year, at 5.72 percent, while wholesale or WPI inflation fell to its lowest level in 22 months, at 4.95 percent.

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Hi, my name is Nisha and I'm an educational journalist based in India. I've always been passionate about the power of education to transform lives, and that's what led me to pursue a career in journalism focused on this area. I completed my Bachelor's degree in English from Hindu College in Delhi in 2013 and then went on to earn my Master's in Journalism and Mass Communication from the Indian Institute of Mass Communication in 2017. During my studies, I also completed several short-term courses on Education in India, Sociology, and other related subjects to deepen my knowledge in this field. I'm particularly interested in improving access to quality education in rural areas, where students often face significant challenges. I've worked on a number of initiatives to address this issue, including advocating for better policies, resources, and practices that can make a difference. As an educational journalist, I'm passionate about using my platform to highlight important issues in the education space. I've covered a wide range of topics, including the impact of technology in the classroom, innovative approaches to teaching and learning, and the challenges facing students from marginalized communities. One of the things I love most about my work is the opportunity to constantly learn and grow. I'm an avid reader and believe that reading is key to expanding one's knowledge and perspective. I'm always seeking out new ideas and insights to help me better understand the world around me. In summary, as an educational journalist, I'm dedicated to using my skills and expertise to make a positive impact in the field of education. I'm committed to improving access to quality education for all students and to using my platform to raise awareness about important issues in this area.

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