New Delhi: Reserve Bank of India’s (RBI’s) Governor Shaktikanta Das has said that the central bank will strive to get headline inflation to its 4 per cent target, however, flagged El Nino as a challenge to its efforts.
The governor in an interview with the PTI exuded confidence that Indian economy will grow at 6.5 per cent in FY24, as estimated by the RBI earlier.
He said that the central bank’s rate hikes by a cumulative 2.50 per cent since May last year, coupled with supply-side measures from the government, have helped get the inflation down to 4.25 per cent in May from a peak of 7.8 per cent in April last year. “We continue to be watchful on the inflation front. We expect inflation to be at 5.1 per cent in FY24, and we will continue to strive and get it down to 4 per cent,” he said.
According to the news agency, the governor said interest rates on loans may have a direct relation with inflation, and if inflation cools down on a durable basis, people can expect lower interest rates on loans.
He pointed out that the Russia-Ukraine war, which led to a shoot-up in the commodity prices, led to a surge in inflation, but added that crude prices are not a concern from an inflation perspective now as they’ve come down to $76-76 a barrel. Food inflation has also come down and measures like the Food Corporation of India releasing wheat and rice stocks have also helped, he said.
Targeted cuts in duties on certain products have also helped, he added. When asked about the challenges on the inflation front, Das pointed to 2-3 factors like the volatile international situation due to geopolitics and the monsoon situation domestically.
“Although there is an expectation of a normal monsoon, there are concerns around El Nino. We will have to see how serious it is. Other challenges are primarily weather-related events, which can have an impact on food inflation,” Das said, adding that we will have to grapple with these uncertainties.
