High food inflation may heavily impact growth: Gokarn

Amid negative impacts from the ailing global economic health, Reserve Bank Deputy Governor Subir Gokarn pointed out that India is affected by worsening food inflation which is mainly due to increase in consumption of cereals, sugar, proteins and pulses. He noted that the peaking inflation will have huge impacts on growth of the country, which is struggling to get out of the sluggishness of global economic slowing down. He affirmed that government’s priority is to contain inflation and urged for more focus on domestic policies.

In the past three years, protein food, like milk, fish prices outstripped food inflation than the tradition increase in cereals and sugar prices and the surge in vegetable prices also pushed up the retail inflation in August to about 10.03% in August, from July’s 9.86%. He also remarked that the efforts of creating productivity ensured jobs by the growth-friendly policies were not effective as expected, due to lack of skill among the employees and absence of labor laws.

He also cautioned that there are indications that unfavorable global conditions might remain in the months to come, and wanted India to gear up its policies by ensuring balance of growth between global and domestic. He however, remained confident that India’s demographic profile is better than China and could recover faster, provided more jobs are generated to meet the demands of the young population of India.