Naveen Sridhara

Economic Survey 2022: Retail inflation back within RBI’s target range, says govt

Economic Survey 2022: RBI projected headline inflation at 6.8 per cent in FY23 which is outside the target range but neither too high nor too low.

The State of the Economy 2022-23 survey said the overshoot of inflation above the upper end of the target range in India was one of the lowest in the world.

Economic Survey news: Retail inflation is back within the Reserve Bank of India’s (RBI) target range in 2022, according to the Economic Survey 2022-23 tabled by Finance Minister Nirmala Sitharaman. The survey said that India’s retail inflation rate peaked at 7.8 per cent in April 2022. It further stated that retail inflation at 7.8 per cent was well above the RBI’s upper tolerance limit of 6 per cent. 

It added that the overshoot of inflation above the upper end of the target range in India was one of the lowest in the world. RBI projected headline inflation at 6.8 per cent in FY23 which is outside the target range but neither too high nor too low. 

The Economic Survey 2022-23 read: “RBI has projected headline inflation at 6.8 per cent in FY23, which is outside its target range. At the same time, it is not high enough to deter private consumption and also not so low as to weaken the inducement to investment.” 

The document further read: “Moderately high inflation has further ensured the anchoring of inflationary expectations preventing prices from weakening demand and growth in India. Additionally, with inflation on the declining path, the interest cost of domestic credit will likely decline, inducing a further increase in demand for credit by corporates and retail borrowers.”

As per the survey, the government adopted a multi-pronged approach to tame rising prices. Some of the steps taken by the government include a phase-wise reduction in export duty of petrol and diesel, import duty on major inputs being reduced to zero, taxes on exports of iron ores and concentrates increased from 30 per cent to 50 per cent, granting waivers on customs duty on cotton imports from April 14, 2022, to September 30, 2022, prohibiting exports of wheat product and imposition of export duty on rice, and reduction in basic duty on crude and refined palm oil, crude soybean oil and crude sunflower oil. 

Besides this, timely government intervention in the housing sector and home loan interest rates attracted buyers in the affordable housing segment in FY23, according to the Economic Survey. The survey further said that a stable to moderate increase in the composite Housing Price Index (HPI) indicates retained value of the asset, offering confidence to homeowners and home loan financiers.