How much has a common person’s position changed due to economic growth? According to some analysts, the finding says nil or close to nil. Strangely, poverty does not end for the rest of us while our politicians’ poverty ends in a calculated period of five years. Once the Congress party had utilised the slogan ‘Garibi Hatao‘, its conclusion stood plainly before us.
Economic growth, inflation and rains are not detachable for noticeable reasons. They grip the cycle of the economy. If rains remain hopelessly scant, inflation is sure to go up in the absence of crop’s lesser production. Then, how can we think of economic growth? When there is an 8% monsoon rainfall deficit in the country, the government needs to be thinking about solving the issue of rural income. Rains, of course, impact the future sowing and harvesting seasons, having its formidable pressure directly on the consumer prices, ultimately wringing the agriculture sector.
Bumper crops can contain inflationary trends. Low cotton harvests may not find any value in checking the price rise. India’s medium-term growth has slowed down to around 6.5% after an initial rebound. Relief packages such as rations and cash transfers in bank accounts can only relieve the rural population to a certain extent.
Inflation wrecked above the Reserve Bank of India’s (RBI) 2%-6% target range in May and June this year before slipping back, while it retained its lower-for-longer position for the economy’s recovery from the adverse effects of a pandemic.
Although the RBI sees inflation at 5.7% in the 2021-22 financial year, yet, it considers the current rise in inflation temporary. It slowly moves toward normalisation for securing a growth outlook. It has also been assessing elevated inflation in its policy stance, but does it look enough to accelerate normalisation? Ask the fiscal gazers who add that priority should be given to whether the uncertainty around the growth forecast has scattered or not, because inflation has been boosting since the past 18 months.