The high food price inflation of around 6 per cent recorded in August is unlikely to persist towards the end of this year, Chief Economic Adviser to the government V Anantha Nageswaran said on Tuesday. India’s retail inflation was also at a 20-month high of 4.82 per cent in August.
“I don’t really expect the August increase in food prices, which was close to 6 per cent, to persist as we go close to the end of this year,” Nageswaran said at an online event by Assocham.
While the rainfall shortfall is 15 per cent, the acreage under sowing is only 2-3 per cent lower than last year, the CEA said, adding that it was “manageable”.
India’s economic momentum remains intact, Nageswaran said. But the government is closely monitoring geopolitical developments, especially following the flare-up of the West Asia conflict in the last few days, he added.
“While risk factors have definitely resurfaced globally in the last few days, the Indian economy is more likely to be resilient rather than becoming more vulnerable,” the CEA said.
Current uncertainties require policy flexibility and agility, which the government would maintain, the CEA said. At the same time, he also asked the private sector to ramp up investment and hiring.
“The government is very much aware of the recent developments and watching them closely, looking at how to respond depending on how things evolve from here,” Nageswaran said.
“We will continue to pursue economic reforms, making it easier to do business and live so that we can overcome this uncertainty,” he added.
Even as the government maintains policy agility, the CEA was confident that the Centre would be able to meet its fiscal deficit target of 4.3 per cent of GDP estimated in the Budget for 2026-27 (FY27).
“The good news is that oil prices never shot up too much for too long, fertiliser prices came down. And looking at non-tax non-debt capital receipts for India due to disinvestment and dividend from Reserve Bank of India), we have the confidence that we could achieve something closer to the 4.3 per cent of GDP in 2026-27,” the CEA said.
