Amid persistent retail inflation above 5%, the Finance Ministry, anticipates a widespread easing of inflationary pressures, aided by increased summer sowing to potentially lower food prices. Core inflation is downward, attributed to robust domestic growth and favourable global commodity prices, alongside government interventions enhancing price stability. These assertions precede the upcoming Reserve Bank of India’s Monetary Policy Committee meeting, with retail inflation at 5.09% in February, driven by elevated food prices despite moderated core inflation. The RBI’s report highlighted recurring food price fluctuations hindering swift inflation decline, emphasizing the need for a prudent monetary policy stance.
The finance ministry’s February report also forecasts an improved current account deficit for 2024-25, supported by a narrowing merchandise trade gap and rising net services receipts. While global investor confidence in India is rising, driven by foreign portfolio investment inflows, sustaining private sector capital formation requires a boost in domestic household savings. Additionally, India’s forthcoming inclusion in Bloomberg’s bond index from January 2025 is expected to enhance inflows, reflecting confidence in the government’s fiscal discipline. The report concludes with a positive outlook for India in the upcoming financial year.
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