India’s central bank (RBI) said that food prices will remain high notwithstanding an average inflation expected to be moderate nearly 5.5 per cent in financial year 2013-14.
RBI executive director Deepak Mohanty said, “We see food prices continue to remain high, partly because income levels have gone up. Increasing real informal wages has been a major drive of inflation.”
“We have higher inflation. We are also a developing nation and so it’s good to have some amount of inflation,” he said.
While talking about the RBi projection, Mohanty ssaid “We expect inflation will moderate to around 5.5 per cent this fiscal and growth will be 5.7 per cent, which will be much lower than the potential rate of 7 per cent.”
Inflation is projected to come down to around three per cent in the medium term, he said adding demand pressure from fiscal deficit are significant and a major concern.
“Post crisis fiscal stability is an issue because if it is in the doldrums we can’t achieve growth. We have taken financial stability as our objective,” he added.
RBI adviser (monetary policy department) B K Bhoi said global prices of crude, food and metals are still at elevated levels and have an impact on Indian economy.
Last month, RBI governor D Subbarao had said the apex bank would take into account the falling inflation while deciding on policy initiative in its mid-quarter review of monetary policy for 2013-14 on June 17.
Source – PTI
©2009 Copyright by Invest In India