Finance Ministry Report: There may be a decline in food inflation rate in India in the coming time and at the same time there may be a rise in the economic growth rate. This is because the agriculture sector is benefiting due to good monsoon and increase in minimum support price. This information was given in the monthly economic review of the Finance Ministry on Monday. India’s retail inflation rate was 6.21 percent in October, which was the highest level in 14 months. This was due to increased pressure on the prices of tomatoes, onions and potatoes due to disruption in supply due to heavy rains in major producing states.
Inflation outlook softens on expectations of good agricultural production
The report said that despite the current price pressure on select food items, good prospects for agricultural production have softened the inflation outlook. Trends in early November have indicated softening of prices of major food items. However, geopolitical factors may continue to influence domestic inflation rates and supply chains.
After a brief slowdown during the monsoon months amid global instability, several high frequency indicators of economic activity in India have seen improvement in October. This includes indicators reflecting rural and urban demand such as Purchasing Managers’ Index and e-way bills.
Expansion of formal workforce on the employment front – Finance Ministry
According to the report, on the employment front, the formal workforce is expanding, there has been strong growth in jobs in the manufacturing sector and there has been an increase in the number of youth in organized sectors. Concerns remain regarding the external sector. Due to slow demand in developed markets, challenges will remain regarding improvement in exports. However, exports of services will continue to grow.
The report further said that the war in Russia and Ukraine has created concerns for the financial markets. Due to this, there has been an increase in demand for safe assets like US Treasury and gold. However, the global geo-political situation remains delicate.
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