Commerce and Industry Minister Piyush Goyal addressed rising inflation concerns on Thursday, stating that the average inflation in India over the past decade under the Modi government has been the lowest since Independence. Goyal also urged the Reserve Bank of India (RBI) to consider a cut in interest rates to stimulate economic growth, following the latest spike in the Consumer Price Index (CPI).
Speaking at the CNBC-TV18 Global Leadership Summit, Goyal responded to recent inflation data showing a 14-month high of 6.1 percent for October 2024. This marks the first time since August that inflation has exceeded the RBI’s tolerance level of 6 percent. The surge was primarily driven by food inflation, which soared to 10.87 percent.
Goyal, however, dismissed concerns over the spike, stating, “It’s not a surprise.” He added that the inflation number was in line with expectations and attributed it to various factors, including the base effect and increased demand during the festival season. The minister assured that inflation would likely ease in the coming months, predicting a drop in December or January.
“The RBI should definitely cut interest rates,” Goyal said when asked about the upcoming RBI Monetary Policy Committee (MPC) meeting in December 2023. “We are all smart enough to understand what’s happening, what the base effect is, and what the factors are behind this increase in inflation.”
Goyal’s comments come as the central bank faces pressure to adjust its policy stance in response to rising inflation, which has been driven largely by food prices. The RBI has maintained a cautious approach to interest rate cuts due to concerns over inflationary pressures, but Goyal emphasized the need for a more accommodative monetary policy to support economic growth.
In addition to inflation, Goyal also addressed broader economic trends, noting that businesses should focus on consumer demand for attractive pricing in light of softening demand in the market. He suggested that industries need to adapt to changing consumer preferences and offer better value to stay competitive.
The RBI’s next monetary policy meeting is scheduled for December 2023, where the MPC will review current economic conditions, including inflation trends, and decide on interest rate adjustments.
