Inflation rate drops to six-year low of 3.3 pc

New Delhi:The Economic Survey 2017 -18 placed in Parliament by Union Finance Minister Arun Jaitley on  Monday paints a rosy picture on the economic scenario of the country with  inflation dropping to the six-year low of 3.3 per cent.

It says that average retail inflation during the current fiscal ending March, 2018 is 3.3 per cent, which is the lowest in the past six financial years. The finance minister has tabled the document as a prelude of presenting the Modi government’s last full budget on February 1.

The survey also says that  decline in the inflation was broad-based across major commodity group except Housing and Fuel, and light. The Headline inflation was below four per cent for 12 straight months, from November 2016 to October 2017 and it was on average around one per cent during April – December in the current financial year.

It observes that the economy has witnessed a gradual transition from a period of high and variable inflation to more stable prices in the last few years. Headline inflation measured by the CPI has remained under control for the fourth successive year.

In fact, says the document, the decline in the inflation in the first half of the current fiscal year was indicative of the benign food inflation which ranged between (-) 2.1 to 1.5 per cent. Survey says ‘’ This has been possible due to good agricultural production coupled with regular price monitoring by the government.’’

However, the rise in food inflation in recent months is mainly due to factors driving  prices of vegetables and fruits. In rural areas while the food was main driver of CPI inflation during 2016-17, in urban areas housing sector has contributed the most to inflation in the current financial year.

The survey found that  many states witness sharp fall in CPI inflation. Inflation in 17 States was below 4 per cent, during the period. This has been possible due to various efforts made to contain inflation at various level by the Government

HIGHLIGHTS

• GDP to grow 7.7.5% in FY 19
• GDP growth to be 6.75 % in FY 2027-18
• Policy vigilance required next fiscal if high oil prices persist or stock prices correct sharply
• Policy agenda for next year – support agriculture, privatize Air India, finish bank recapitalization
• GST data shows 50 % rise in number of indirect tax payers
• Tax collection by states, local government significantly lower than those in other federal countries
• Demonetisation has encouraged financial savings
• Insolvency Code being actively used to resolve NPA woes
• Retail inflation averaged 3.3% in 2017-18, lowest in last 6 years
• India needs to address pendency, delays and backlogs in the appellate and judicial arenas
• Urban migration leading to feminization of farm sector
• Rs20,339 cr approved for interest subvention for farmers in current fiscal
• FDI in services sector rises 15% in 2017-18 on reforms
• India’s external sector to remain strong on likely improvement in global trade
• Swachh Bharat initiative improved sanitation coverage in rural areas from 39% to 76% in January 2018