Union finance minister Nirmala Sitharaman on Tuesday said that the drop in inflation and a surge in high–frequency indicators are reflecting the gathering momentum of recovery from the impact of the COVID-19 pandemic.
“Retail inflation has once again dropped in August to a four-month low. Along with this, other high-frequency indicators are also picking up, reflecting the gathering momentum of the recovery,” Sitharaman’s office tweeted on Tuesday.
The development comes a day after the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation revealed that India’s retail inflation declined marginally to 5.3% in August compared to 5.59% in July. While the rural inflation was 5.28 per cent in August, the urban inflation was 5.32 per cent.
Notably, inflation has declined significantly if the figures are compared to August 2020 when inflation was pegged at 6.69 per cent. The decline in inflation comes due to a fall in food prices. Food prices declined to 3.11 per cent in August compared to 3.96 per cent in July.
Despite the second wave of the pandemic, India registered a strong economic recovery in the June quarter, in line with the growth forecast made by several global agencies including the International Monetary Fund and the World Bank. While the IMF has predicted that India’s gross domestic product will grow by 9.5 per cent in 2021, the World Bank’s global economic prospects report has pegged India’s growth to be around 8.4 per cent. The RBI too has predicted the Indian economy to grow by 9.5 per cent.
Additional borrowing allowed for 11 states
Meanwhile, the Union finance ministry on Tuesday said that 11 states have met their capital expenditure target for the first quarter of 2021-22. These states include Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand.
These states have been allowed to borrow an additional amount of Rs 15,721 crore by the department of expenditure. The additional open market borrowing will help the states in further pushing their capital expenditure and is equivalent to 0.25 per cent of theirs gross state domestic product (GSDP).
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