How is the Centre Balancing Inflation Control with Economic Growth?
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Synopsis
Amid ongoing economic challenges, the Indian government has introduced various strategies to tackle inflation while ensuring sustained growth. This article explores the measures in place, their effects on citizens, and the collaborative efforts with the Reserve Bank of India to stabilize the economy.
Key Takeaways
- Inflation Control: Various administrative measures are in place.
- Economic Growth: Efforts aim to sustain growth alongside inflation management.
- Food Security: Free food distribution to large beneficiary groups.
- Monetary Policy: RBI's repo rate adjustments to support economic stability.
- Retail Inflation: Currently at the lowest rate in six years.
New Delhi, July 22 (NationPress) The government announced on Tuesday that it has implemented a range of administrative strategies, including fiscal and trade policies, to effectively control inflation and alleviate its effects on ordinary citizens.
Union Minister of State for Finance, Pankaj Chaudhary, stated in a written response to a question in the Rajya Sabha that these coordinated efforts are designed to harmonize inflation control with ongoing economic growth.
Measures include enhancing buffer stocks for essential food items, strategic sales of procured grains in the open market, facilitating imports, imposing export restrictions during shortages, and enforcing stock limits to increase the availability of selected commodities, among other initiatives.
Additionally, the government has initiated retail sales of certain food items under the Bharat brand at subsidized prices and is distributing food grains free of charge to approximately 81 crore beneficiaries under the National Food Security Act. Furthermore, it aims to boost individual disposable income by exempting annual incomes up to Rs 12 lakh (and Rs 2.75 lakh for salaried individuals with standard deductions) from income tax.
In further detail, the minister noted that alongside these efforts, the Reserve Bank of India's Monetary Policy Committee has raised the repo rate by a total of 250 basis points (from 4 percent to 6.5 percent) between May 2022 and February 2023, maintaining this rate at 6.5 percent through January 2025.
As a result, the average year-on-year retail inflation, measured by the CPI, declined from 5.4 percent in 2023-24 to 4.6 percent in 2024-25, marking the lowest level in six years.
Recent data indicates that retail inflation further decreased to 2.1 percent in June 2025.
Due to a widespread decrease in inflation and to foster growth, the RBI has enacted a 100 basis point cut in the policy (repo) rate since February 2025. These coordinated actions are aimed at striking a balance between inflation control and sustained economic growth, as highlighted by the minister.
The Central Bank adheres to a policy of flexible inflation targeting as its principal monetary policy framework, aiming for a Consumer Price Index (CPI) inflation rate (headline inflation) to be maintained at 4 percent.
Over the last three quarters, the CPI inflation rate has remained within the RBI's tolerance band of 4 percent (the WPI is not specifically targeted by the RBI).
Point of View
It's crucial to recognize that the government's approach to managing inflation while promoting economic growth reflects a commitment to stability and support for the populace. These measures, backed by the RBI's monetary policy, aim to create a balanced economic environment essential for the nation's progress.
NationPress
22/07/2025
Frequently Asked Questions
What measures is the government taking to control inflation?
The government is implementing various strategies, including increasing buffer stocks of essential foods, retail sales at subsidized prices, and providing free food grains to beneficiaries.
How has the RBI supported these measures?
The RBI has raised the repo rate and made adjustments to promote growth, including a recent cut in policy rates.
What is the current inflation rate in India?
As of June 2025, the retail inflation rate has dropped to 2.1 percent.
