Striking the Balance between Growth and Inflation in India*

posted 8 Jul 2011, 23:41 by CA Naresh Shah


The Indian economy recovered relatively quickly from the financial crisis of 2008, but inflationary pressures emerged even in the early stages of the recovery in late 2009. Over the past year and a half, the challenge for monetary policy has been to contain these inflationary pressures without disrupting the recovery. The economy grew by 8.5 per cent in the fiscal year 2010-11, which is close to the five-year average pre-crisis, but year-end headline inflation was over 9 per cent, well above tolerance limits. Meanwhile, global developments have implications for both growth and inflation trajectories in India over the coming months. In this presentation, I propose to talk about the key global and domestic factors that are shaping our growth and inflation outlook, as a backdrop to discussing monetary policy actions and their impact. I will then briefly talk about challenges to communication.