Episode 132: What’s Driving GDP Growth – and Falling Inflation – in India?

05 AUG 2019
TOPICS: Economic Outlooks | Regional Analysis

05 AUG 2019 - Back in 2013, India’s inflation rate was the highest among emerging economies; now it’s among the lowest, according to Prachi Mishra, India chief economist for Goldman Sachs. “While many…expressed concern that high levels of inflation would become embedded in expectations of price setters and lead to a self-sustaining inflationary spiral, the focus now has shifted to the plight of farmers who recently marched to Delhi in large numbers to protest against low food prices and demand higher returns on the crops,” Mishra explains in this episode. So why has inflation been falling? A large contributor has been declining food prices across the country – specifically in cereals and vegetables. Looking ahead, Mishra says that unless hit by major shocks, food inflation is likely to remain “rather subdued going forward.” Against this backdrop, the Central Bank of India has recently cut interest rates, a dovish policy move intended to stimulate the economy.     

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This podcast was recorded on July 17, 2019.

 

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