(Bloomberg) -- Finance Minister Nirmala Sitharaman said authorities are attempting to ease the country’s inflation rate below 7%, after rising prices have consistently breached the central bank’s target this year.
“We are keeping an eye on inflation and will certainly bring it down below 7%,” Sitharaman told lawmakers in New Delhi late Monday.
Tangled supply chains and shortages stemming from the war in Ukraine, coupled with a weakening domestic currency are adding to inflationary concerns in Asia’s third-largest economy, with prices staying above the central bank’s 6% target ceiling since the beginning of the year.
Retail inflation rose 7.01% in June from a year earlier and price gains remain elevated following the rupee’s 5.9% decline against the dollar this year, keeping India’s import bill high.
The Reserve Bank of India, which has faced criticism for not acting aggressively enough, has raised interest rates by a total 90 basis points in two moves this year and is scheduled to hold its next monetary policy review later this week on Friday. If prices are not brought down to the mandated 2%-6% range, the central bank will have to answer why it failed to do so.
India’s federal government took a raft of measures in May including, excise duty cuts on fuel, enhancing subsidies and slashing import duty on some edible oils to tame prices. The cooling of global commodity prices may ease inflation woes for the country, but for the fall in the currency that slid to record lows last month.
In Monday’s parliament session, Sitharaman attempted to diffuse concerns over the lowering of India’s growth forecasts by various banks and agencies. She said the nation’s economy was “showing very positive signs” and remains among the world’s “fastest growing” nations, despite the global downturn.
“There is no question of India getting into recession or stagflation,” Sitharaman said, adding that India had “sufficient” foreign reserves.
She said India has avoided economic predicaments that have led neighboring Bangladesh, Sri Lanka and Pakistan to seek International Monetary Fund support this year.