Prime Minister Narendra Modi has emphasized the imperative need for close international collaboration in addressing the escalating issue of inflation, which is affecting numerous countries worldwide. In a Press briefing, Prime Minister Modi acknowledged the gravity of inflation as a pressing concern, particularly in light of the changing global landscape driven by the COVID-19 pandemic and the Ukraine-Russia conflict.
PM Modi strongly advocated for countries to work together to develop effective strategies for managing inflation. He highlighted that during the recent meeting of G20 finance ministers and central bank governors, there was a unanimous consensus on the necessity of ensuring that the policies implemented by nations to combat inflation do not have adverse effects on other countries. "Furthermore," PM Modi emphasized, "there is a shared understanding that timely and transparent communication of central banks' policy stances plays a pivotal role in this endeavor."
Regarding India's own inflation rate, Prime Minister Modi disclosed that his government has taken several proactive measures to curb rising prices. Despite the challenges posed by global uncertainties, India managed to maintain an inflation rate that was two percentage points lower than the global average in 2022, according to the Prime Minister.
In the context of India, the central government's data shows that the annual inflation rate, as measured by the All India Wholesale Price Index (WPI), stood at (-) 1.36 percent (Provisional) for July 2023, in comparison to (-) 4.12 percent recorded in June 2023.
Reserve Bank of India Governor Shaktikanta Das has consistently affirmed the central bank's commitment to bringing inflation down to 4 percent. Governor Das also stressed the importance of remaining vigilant about potential risks, particularly as frequent global supply shocks can have significant implications for managing the price situation.
During a lecture at the Delhi School of Economics, Governor Das remarked, "While central banks in advanced economies aggressively raised interest rates in 2022 after a prolonged period of near-zero policy rates, which led to stress in certain banks, our fight against inflation is not constrained by financial stability concerns. In fact, even during the COVID-19 pandemic, we consistently implemented measures to bolster financial stability."
The Indian government has set a target for the RBI to maintain inflation at 4 percent, with a margin of 2 percent on either side.
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