India’s economic growth is expected to be subdued over the coming year, but inflation will also decline partly due to monetary policy effects and partly due to base effects, Poonam Gupta said on Monday. , a member of the Prime Minister’s Economic Advisory Council, suggesting measures to protect the economy from recurring shocks such as high inflation, oil prices or capital outflows.
Noting that no country will have monetary or fiscal space to boost growth in the coming year, Ms. Gupta, director general of the National Council of Applied Economic Research, said global growth would slow. as expected by most agencies.
The acceleration of inflation in India to almost 7% this year is mainly due to high vegetable prices, which are a domestic problem and not an “external” problem, she said.
“It’s really sad in a way that our monetary policy is being held hostage by vegetable prices. And monetary policy is a brutal instrument to fight this kind of inflation,” Ms. Gupta pointed out, suggesting price “stabilization” efforts to balance domestic demand and vegetable supply problems.
“Certainly our economy, which is over $3 trillion, can manage its vegetable prices better than it has. These shocks, which get the undue attention of policy makers, I would say… can be handled better. And it’s time we tackled them better in order to focus on more important things, which generate more jobs, manufacturing and exports,” she concluded during a discussion on the next budget. of the Union organized by the Ananta Center.
“The Indian economy is very well coupled with the global economy for a number of reasons… If global demand for goods slows down, India’s exports slow down,” she said, noting that the most forecasters predict growth of around 6% in 2023-24 for India. “It could be a little lower, it could be a little higher.”