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FM says India 'did not breach inflation aim so badly' after CPI hit 17 month high in March

economy | Apr 20, 2022 12:18 PM IST

FM says India 'did not breach inflation aim so badly' after CPI hit 17-month high in March

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Nirmala Sitharaman said: "The one big step that the government decided was we shall not tax people to get out of the pandemic."

Even as Indian CPI (consumer price index) rose to a 17-month high of about 6.95 percent in March against 6.07 percent in February, Finance Minister Nirmala Sitharaman has said the country has "not breached inflation aim so badly.” India’s headline retail inflation has exceeded the Reserve Bank of India’s inflation target for three consecutive months.

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“Even with challenges like rising prices of crude and commodities, India’s inflation today is about 6.9 percent (last month). Our tolerance band is only 4 percent, plus minus 2 percent. So, we could go up to 6… We have breached the 6 percent mark, but not so badly,” she said at an event organised by the Atlantic Council in Washington DC on the sidelines of International Monetary Fund (IMF) and World Bank annual meetings.
“The price burden is on the common man, and the government is simply trying to relieve him of that stress. But notwithstanding the challenges, we are now moving ahead, moving forward with systems and process reforms,” she said.
Before the event at Atlantic Council, IMF managing director Kristalina Georgieva had said India’s well-targeted policy mix helped the “Indian economy remain resilient even with limited fiscal space”.
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Sitharaman said when the pandemic hit, the government realised that the best multiplier it would have for the recovery of the economy would be for it to spend money on building infrastructure.
“So, capital expenditure was our route to recovery,” Sitharaman said. “The one big step that the government decided was we shall not tax people to get out of the pandemic. Our revenue to rescue the economy was not going to come from taxing people. No 'COVID tax' was levied on anybody.”
 
She added that the government made sure that for 800 million Indians, foodgrains, some quantity of pulses and some quantity of cooking gas (LPG) were distributed for free in 2020. “The free foodgrain program continued in 2021 and it continues even now,” she said.
Rural India’s food price inflation has also more than doubled, from 3.94 percent in March 2021 to 8.04 percent in March 2022.
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