As per the Reserve Bank of India (RBI), food prices will remain at a higher level despite average inflation in the country being expected to moderate to around 5.5 per cent this fiscal. RBI Executive Director Deepak Mohanty said that increasing income level and real informal wages has been a major drive of inflation and will push the food prices up.
Mohanty said that central bank expects inflation to moderate to around 5.5 per cent this fiscal. India is a developing nation and so it's good to have some amount of inflation. By adding further, he said that inflation is projected to come down to around three per cent in the medium term adding that the demand pressure from fiscal deficit is significant and a major concern for the domestic economy. The RBI projects 5.7 percent growth for the current fiscal, which will be much lower than the potential growth rate of 7 per cent.
Referring to the fiscal stability, Mohanty said that post global crisis, fiscal stability has become an issue to the country and by ignoring this we can’t achieve high growth. Therefore, the RBI has taken financial stability as its objective.
