Food inflation is as high as 8.6 per cent in the wake of an irregular monsoon and unseasonal rains. The consumer price index (CPI) stood at 7.41 per cent in September, which is higher than the Reserve Bank of India’s estimated level of six per cent. To make matters worse, industrial growth has shrunk by 80 basis points in August, which is not a good sign for any economy. Although India has saved INR 33 thousand crore on its energy bill by purchasing crude at a cheaper price from Russia, the privilege may not last long as the ongoing war between Russia-Ukraine is showing no signs of coming to an end soon and oil producing nations have made the decision to reduce crude production. All these developments together depict a gloomy picture ahead.
Along with other nations, India too is facing the challenges of countering high inflation and lower economic growth. The double whammy is potent enough to cause considerable damage to our economy. However, Union Finance Minister Nirmala Sitharaman has categorically assured the nation that the country will be able to withstand the storm and will emerge stronger, economists are not so optimistic about the resilience power of the Indian economy in absorbing the dual shock of the pandemic and the present conflict in Eastern Europe. It is no doubt that the task is a difficult one considering the fact that India’s fate cannot be vastly different from other nations as the world today is an interconnected one. Every nation needs active cooperation of other nations to prosper economically. International relations are driven by trade considerations, rather than ideology. So, India will not be able to avoid the effects of the worldwide economic slump.
In such a situation India can maintain the rate of economic progress only by implementing all possible measures to tackle inflation, ensuring industrial growth and at the same time spending an increased amount on infrastructure projects to attract investments. Instead of meekly surrendering before the prevailing situation, India can treat it as an opportunity to make rapid economic development. The Union Finance Minister has hinted that the next budget will see the Indian economy prepared to tackle all these problems. As the first step towards this direction, the Centre has already announced Rs. 22 thousand crore as a one time grant to the public sector oil marketing companies to cover the losses that these companies suffered in distributing domestic LPG. It means that there is no possibility of an increase of LPG prices soon which will provide a great relief to households. At the same time, an all-out effort should be made to keep the fiscal deficit at par with the targeted level, which may see a rise due to lower consumption. Finally, a good harvest and adequate investment can ease the pressure on the Indian economy to a great extent. These critical issues need to be addressed in-order for india to weather the economic storm.