Economic Survey: RBI should stop focusing on food inflation

After the pre-Budget Economic Survey, there has been talk of RBI not emphasizing food prices while setting interest rates. The government can help low-income people by providing coupons or cash to help with expensive food items. Even though inflation has come down, RBI has not cut interest rates due to high food prices. Banks fix rates for mortgages and loans based on RBI rates. It is a recommendation of Economic Survey: Economic Survey Food Inflation In Economic Survey, it is recommended to consider inflation targeting as a policy approach. Due to the supply problem, food items are not included in this and the price is increasing. In 2016, the Reserve Bank of India targeted the inflation rate at four percent with a margin of error of two percent. They review the policy rate every two months using the Consumer Price Index, which takes into account things like food and fuel costs. Also Read: Economic survey: Retail inflation stood at 5.08% in June, food inflation at 9.36% on higher stock market returns. . Due to inflation concerns, the RBI has kept the policy rate unchanged from February 2023. RBI Governor Shaktikanta Das had said in June that it was important to monitor food price uncertainties as they affect overall inflation. There is a responsibility to help those with low incomes, monetary policy can help manage demand-driven inflation, but its use to counter inflation driven by supply-side issues is not effective. It proposed focusing on inflation rates other than food items and finding ways to help low-income individuals with high food costs, such as providing direct benefits or coupons. The RBI expects retail inflation to be 4.5% in 2024-25, lower than the 5.4% recorded last year. Also Read: Economic Survey: Focus on tourists and tourism sector: Economic Survey: RBI should stop focusing on food inflation