As the Narendra Modi government completes one year in office, it seems to have got a firm grip over the issue of rising prices and was able to tame it with a few bold and imaginative steps.
The new BJP government had to tackle the challenge of surging inflationary pressure when it assumed office a year ago. Food inflation was in double digits and the new regime took urgent steps to check price rises across the spectrum of daily supply chain.
Further, the Central government took the states into confidence and went after hoarders to improve the supplies of ration items.
Apart from setting up a Rs 500-crore price stabilisation fund for market interventions to control the prices of perishable commodities, various agencies were activated to bring the prices under control.
However, experts are of the view that the sharp decline in global crude oil prices had helped in a big way to moderate the retail and wholesale inflation.
The drop in retail and wholesale inflations led the RBI to cut interest rates which in turned helped the government to start investments critical for the consumption-led economic growth. Following this, PSU banks announced a cut in lending rates which will kick off the demand for loans from consumers.
But he forecast of less than normal monsoon has added a certain degree of uncertainty over the sustainability of low inflationary trajectory. Hence, the government will have to work on the next big challenge – that is improving the supply chain, reviving agricultural growth and helping farmers to diversify into other crops and setting up irrigation channels across the country.
Indian economy must be swayed away from dependence on monsoon rains for sustaining its growth as weather Gods may play truant on occasions.