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India’s retail inflation likely to ease by December: C Rangarajan

17 Nov 2017 Evaluate

Former RBI Governor C Rangarajan has expressed his hopes that India’s retail inflation, which accelerated to seven-month high of 3.58 percent in the month of October 2017, is likely to ease by December and remain below the 4 percent level till the end of financial year 2018. Besides, he thinks that this is the end of the season when prices rise as far as food articles are concerned.

Rangarajan has stated that there will be a seasonal decline in food prices in the month of December.  Therefore, he believes that now that the monsoon has also been good, the food prices may come down rather than rise further. Adding further, he indicated that the country’s inflation on wholesale level rose to a six-month high in the month of October as prices of food articles, led by onion and vegetables, witnessed a sharp rise.

Former RBI Governor further said that earlier, in his address, the role of the government as a producer of marketable goods is diminishing. He noted that the government's role as a regulator is very important, given the prevailing market conditions to ensure the system and structure remain competitive. Stressing the need for prudence in fiscal spending, he pointed out that most of the government funds, in the name of public expenditure, were spent towards the revenue expenditure instead of capital expenditure. According to him, this was not a wise move, as it led to larger fiscal deficit with proportionally lesser public good.


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