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Executing confidence that inflation would further decline, Finance Minister Nirmala Sitharaman has said that the government is on track to meet its budgetary target for deficit and added that there is no fear of stagflation in India. She further said that inflation has come down and it is now in the tolerable band of the RBI. She highlighted that inflation has been declining since April 2022 and it is declining further. As per the law, Monetary Policy Committee headed by RBI Governor has been given task of maintaining inflation at 4 per cent with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent.

She said Prime Minister Narendra Modi and his group of ministers are constantly watching and making periodic interventions and taking measures to keep inflation under check to ensure that the poor do not have to bear the extra financial burden. She also said several supply-side measures have been taken by the government to address inflation, including reduction in excise duty by Rs 8 per litre on petrol and Rs 6 per litre on diesel on May 21, 2022, prohibition of export of wheat products, imposition of export duty on rice, and reduction in import duties. In addition, the government has imposed stock limits on edible oils and oil seeds, and the inclusion of soya meal as an essential commodity in the schedule of the Essential Commodities Act, 1955 and imposition of a stock limit on soya meal.

Finance minister said stagflation is a phenomenon when there is slowdown in economy and high inflation, and added retail inflation has come down below 6 per cent to 5.8 per cent and the wholesale price index at 21-month low of 5.85 per cent in November. She added India is the fastest growing economy and lower inflation with forebearance limit. With regard to fiscal deficit, she said the government would be able to meet the fiscal deficit target of 6.4 per cent of the GDP for the current financial year. She also said the government is committed to the path of fiscal consolidation.

On declining value of the rupee against the US dollar, she said ‘Every report has told you that Indian rupee has only strengthened against the dollar…we have performed much better than many other emerging market economies.’ Exchange rate of the Indian Rupee (INR) is market-determined. INR, which had earlier weakened by 8.7 per cent against the US dollar till October 19, 2022 has since pared some of the losses and its depreciation stands at about 6.9 per cent in the current financial year till November 30, 2022. In comparison to emerging market peer currencies, INR movement has been relatively stable.