{"id":206650,"date":"2022-09-19T18:46:04","date_gmt":"2022-09-19T13:16:04","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=206650"},"modified":"2022-09-19T18:46:04","modified_gmt":"2022-09-19T13:16:04","slug":"out-of-tune-an-orchestra-of-multiple-instruments-is-required-to-deal-with-the-continuing-high-inflation","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/out-of-tune-an-orchestra-of-multiple-instruments-is-required-to-deal-with-the-continuing-high-inflation\/","title":{"rendered":"Out of tune: An orchestra of multiple instruments is required to deal with the continuing high inflation"},"content":{"rendered":"\n

Source: The post is based on an article \u201cOut of tune: An orchestra of multiple instruments is required to deal with the continuing high inflation<\/strong>\u201d published in The Indian Express<\/strong> on 19th September 2022<\/strong>.<\/p>\n

Syllabus<\/strong>: GS 3 – Indian Economy and issues relating to planning, mobilization, of resources.<\/p>\n

Relevance<\/strong>: Inflation and issues associated with it<\/p>\n

News<\/strong>: Covid pandemic and Ukraine war has led to the rise in inflation. The inflation is currently at 7 percent (CPI-based) and 12.4 percent (WPI based). However, inflation in India is better when compared to other countries.<\/p>\n

What is the situation of inflation in India compared to other countries across the world?<\/h5>\n

India has done well when compared to the US and most European countries where inflation is higher ranging from 8 to 12 percent.<\/p>\n

The rate of inflation in India is also lower than in Turkey (80%), Pakistan (27%) and Sri Lanka (64%).<\/p>\n

What is the current situation of the Indian economy and what can be done?<\/h5>\n
Inflation<\/h6>\n

Problems<\/strong>: RBI and MPC have been entrusted to keep inflation within the 4 +\/- 2% band but targeting inflation should not be the only objective. Inflation has also impacted the GDP growth of the country.<\/p>\n

Solution<\/strong>: Finance Minister has recently said that inflation management requires organization and coordination of many policies. Monetary policy alone cannot tackle inflation.<\/p>\n

Therefore, monetary policy along with fiscal, trade and tariff policy, food and agricultural policy, and infrastructure policy should work together to control inflation.<\/p>\n

Fiscal deficit<\/h6>\n

Problem<\/strong>: Fiscal deficit has crossed 10% of GDP (Centre and states combined) for continuously three years. This deficit is causing inflationary pressures along with loose monetary policy.<\/p>\n

Solution<\/strong>: A tight fiscal policy is needed.<\/p>\n

However, India has effectively managed its inflation despite various problems.<\/p>\n

How has India tried to manage its inflation?<\/h5>\n

India has effectively managed its inflation during the pandemic hit and protected its GDP growth also. This is done by a)<\/strong> Not giving an excessive stimulus to boost consumption demand, b)<\/strong> Spend more on infrastructure building that had a high multiplier effect on GDP which created demand, c)\u00a0<\/strong><\/span>Recent deal with Russia for importing crude oil at discounted prices was part of an inflation management strategy.<\/p>\n

What can be the further course of action to control inflation?<\/h5>\n

India needs better macroeconomic management to put inflation at 4% with GDP growth at 7%. The measure that can be taken are \u2013<\/p>\n

First, there is a need to re-orienting public policy from freebies to investments in rural areas. India needs to focus to create more and higher productive jobs, better rural infrastructure, improving the competitiveness of agriculture, agro-based industry and the MSME sector.<\/p>\n

Second, there is a need for higher R&D allocations in agriculture. This will help to develop climate-smart agriculture with an increase in food supplies. Stable and higher farm productivity is required during unexpected climate change to control food inflation.<\/p>\n

Third, there is also a need to rationalize the food and fertilizer subsidies that are expected to increase to Rs 5 lakh crore in 2022-23.<\/p>\n

Fourth, food and beverages have a 45.86% weight in the CPI basket in India. The weights of food and beverages in the CPI basket need urgent revision.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on an article \u201cOut of tune: An orchestra of multiple instruments is required to deal with the continuing high inflation\u201d published in The Indian Express on 19th September 2022. Syllabus: GS 3 – Indian Economy and issues relating to planning, mobilization, of resources. Relevance: Inflation and issues associated with it… Continue reading Out of tune: An orchestra of multiple instruments is required to deal with the continuing high inflation<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10500],"class_list":["post-206650","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704837198},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/206650","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=206650"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/206650\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=206650"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=206650"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=206650"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}