Geo-political tensions biggest risk to growth

New Delhi: The biggest risk to India's growth outlook is an escalation of geo-political tensions, especially if these tensions spread to the Asian region, RBI Monetary Policy Committee (MPC) member Jayanth R Varma said on Wednesday. Varma, in an interview to PTI, said that inflation and inflationary expectations appear to be moderating and high inflation will certainly not become the 'norm' in the country.

He is cautiously optimistic about the Indian economy as after the pandemic abated, consumption demand has begun to recover though the recovery is uneven across sectors and industries. "Capacity utilization has been inching up, and is now approaching levels at which business will have to seriously consider capital expenditure for expansion," Varma added.

He further noted that the MPC is determined to bring inflation down close to the target rate of 4 per cent as quickly as possible without imposing intolerable costs in terms of economic growth. "I would like to emphasize that high inflation will certainly not become the norm in India," he said. The Reserve Bank in its latest MPC meeting in August had decided to increase the benchmark lending rate by 50 basis points to 5.40 per cent to quell inflation. The central bank has been tasked by the government to ensure that retail inflation remains within the range of 2-6 per cent.