Defending the jump in India’s wholesale price-indexed (WPI) inflation in August to 3.24%, nearly double that of July, Union Finance Minister Arun Jaitley on Thursday said it was well below the target of 4%.
“During monsoon, there is a spike in vegetable prices. It is usually the highest level of inflation in the entire year. We have touched only 3.24%. It is very reasonable and modest against the double digit inflation seen during the earlier UPA rule. In the last one year, consistently inflation is under 4 per cent target of the Reserve Bank of India’s monetary policy committee,” Jaitley told Times Now in an interview.
“We have brought down prices of essential commodities as a result of which the last three years have been the best phase of inflation management. A statutory monetary policy committee has set target of inflation management at 4 per cent,” he said.
The annual rate of inflation, based on monthly WPI, stood at 3.24% for August 2017 (over August 2016) compared with 1.88% (provisional) for the previous month and 1.09% during the corresponding month of the previous year, according to data released by the Commerce Ministry.
Fuel and power were the major contributors to the rise in wholesale inflation.
The Finance Minister added that prior to 2014, during the UPA regime, the county was used to double digit inflation between 9-11%.
The Indian basket of imported crude oils gained nearly $3.50 a barrel during last week even as petrol prices in the country touched their highest levels.
“It is because the global environment of slow down is impacting India. Despite we have maintained reasonable growth rate. There is absence of private investment because of the banking crisis attributable to the mindless loans given during UPA regime. Growth is based on larged foreign direct investment, public spending. India needs large public spending.
“Whatever revenue comes from fuel goes towards large amount of public spending. Do we not want rural roads to be built, highways to be built? Money collected as taxes from fuel doesn’t go to government’s pocket, but towards infrastructure creation,” he said.
Jaitley said that the government was concerned over growth in the manufacturing sector.
“Certainly we are concerned. While service sector grew in the last quarter, manufacturing sector came down. If it was only because of demonetisation, it should have been across. It was in anticipation of Goods and Services Tax (GST) roll-out from July 1. People instead of adding to the manufacturing, were destocking,” he said.
“I am hopeful with series of steps, investment environment is improved. Manufacturing in India should pick up,” he added.