The Indian economy’s domestic dynamics continue to be strong though negative cross-border spillovers and adverse global developments can act anytime as a deterrent to achieve the potential high growth path in the current financial year, the Finance Ministry said on Thursday in its monthly economic review for June 2023. The ministry also pointed out that though inflation has “significantly declined” in June quarter, the recent spike in the prices of ‘fruits,’ ‘vegetables,’ and ‘pulses and products due to weather-related disruptions has led to a sequential increase in food inflation in June 2023, emphasising the need for a “guarded approach by RBI and the government”.
“In the case of India as well, inflation has significantly declined in the June 2023 quarter compared to the corresponding quarter last year and has entered the tolerance band of the RBI. The core inflation has also been softening since the beginning of the June 2023 quarter, indicating a restoration of overall price stability in the economy. However, the recent spike in the prices of ‘fruits,’ ‘vegetables,’ and ‘pulses and products owing to weather-related disruptions has led to a sequential increase in food inflation for the month of June 2023. As inflation has been reined in only recently while threats of supply-side shocks, including El Nino, persist, the RBI and the government continue to be guarded for appropriate and timely policy response,” the review stated.
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