Indian economy: Some issues and concerns of govt's mid-year review

Government’s mid-year review has raised some issues and tried to address some concerns.

ET lists some important ones.

Inflation may be moderating:

The number of commodities experiencing double digit inflation down sharply.

Seasonly adjusted annualized rate of infl ation (SAAR) momentum of non-food manufacturing inflation down.

Inflation in consumer durables down Changes in dietary habits because of incomes making certain foods expensive.

Inefficient intermediation and losses causing vegetable prices to be volatile.

Declining forex reserves:

Reserves first line of defence against volatile capital flows.

Decline in reserves as a percentage of GDP, which needs to be watched closely.

Inflation, Repo on the Cover:

In a departure from the plain covers of the mid-yr economic analysis, this edition has a graph that shows movement of repo rate, infl ation & SAAR.

Coming a day before RBI review, the choice of data for the cover raised an interesting question. Was the govt telling the RBI something?

Chief economic advisor Raghuram Rajan was quick to dismiss any such suggestion. “I don’t think you should read too much ...We were looking to give some vibrancy beyond the coloured page.

He said the role of govt is to increase the real side growth, the RBI will look at the monetary side.

Govt has implemented:

70/81 announcements made in budget.