Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
4) Economists have pointed towards several risks which RBI cant ignore in India’s current low-inflation spell. Discuss.(250 words)
Why this question
India’s headline inflation data may be subdued for now, but there are mounting risks that are difficult to ignore. In this context it is important to discuss those factors in detail.
Discuss- this is an all-encompassing directive which mandates us to write in detail about the key demand of the question. we also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.
Key demand of the question.
The question wants us to write in detail about the risks faced by Indian economy at this juncture of time when inflation has been high for some time and has now subdued.
Structure of the answer
Introduction– mention the state of India’s headline inflation for past several months. Mention that The RBI expects inflation in the range of 3.9 percent to 4.5 percent in the second half of the fiscal year to March 2019, down from 4.8 percent projected earlier.
Discuss the risks faced by the economy with regards to inflation. E.g a record-low currency, high oil prices, and a looming election; India, which imports more than 80 percent of its oil needs, is vulnerable to increasing crude prices. Together with the rupee, Asia’s worst-performing major currency this year, this worsens the outlook for inflation and the current-account gap. Besides, the government’s move to raise support prices for farm produce will add to the inflationary pressures. Discuss each risk briefly and bring out their relationship with inflation.
Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue.