The Finance Ministry anticipates the inflation print for July 2021 coming in at less than 6 per cent, Krishnamurthy Subramanian, Chief Economic Advisor to the Finance Ministry, said on Thursday.

“In May and June, the inflation print had come above 6 per cent. I anticipate that this month and the next, the inflation will be less than 6 per cent. With reasonable probability, I expect the print for this month (July) to come less than 6 per cent,” Subramanian said at FICCI organised virtual event on capital markets.

He highlighted that post May print of 6 per cent, he had internally during deliberations with regulators mentioned that subsequent months inflation should see moderation in inflation.

“The sequential momentum did go down and core inflation has also decreased. So far the assessment and what has transpired is in sync which gives me confidence that going forward as well inflation would be range bound despite rise in commodities. It should come within the tolerance limit of RBI of 4+/-2 per cent,” Subramanian said.

He also highlighted that for nine months in the post first wave period, the country had inflation above six per cent and primarily because of the supply side frictions that manifested. However, the second wave duration has been lower and restrictions were also lower and heterogenous among States, he added.

At a global level, Subramanian said that he expects global inflation this year to be at higher level than what has been seen for a while.

GDP growth

Subramanian said the Indian economy is expected to grow at fairly robust clip this fiscal in the ballpark of 10.5 per cent, which was the number factored in this year’s budget forecast. For 2022-23, the Chief Economic Advisor sees economy growth at 6.5-7 per cent and accelerate towards 8 per cent in the subsequent years.

“Our assessment has been that impact of second wave has not been that large on the economy as that of first wave. We didn’t go as aggressive to say that economic growth will be 12.5 per cent nor have we done the revision to as low as 9.5 per cent as the IMF has done,” he added.

V shaped recovery

Earlier, addressing a virtual meeting on the ‘Roadmap for Economic Recovery’ organised by industry body Assocham, Subramanian said that India has seen a sound V shaped recovery since the first wave of the pandemic and that India is the only country among large countries, which have had two consecutive quarters of growth during the pandemic.

He highlighted that government choices on reforms are clearly driven by hope. “If you see the reforms and seminal reforms that have been done over the last year and a half you will see clear signals that the policy reforms the government has taken are clearly driven by hope, even as a lot of commentary seems to be driven by excessive fear,” he said.

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