‘Arjuna’s eye’ focus on inflation, 4% target:RBI governor Shaktikanta Das

NEW DELHI: Amid uncertainties, there is a need to maintain ‘Arjuna’s eye’ on the evolving inflation scenario and the RBI’s goal is to achieve the target of 4%, governor Shaktikanta Das said in his monetary policy statement on Thursday.
While risks to near-term inflation have moderated somewhat, pressure remains during the second half of the year which needs to be watched and addressed at the appropriate time, said the governor.
“Let me re-emphasise that headline inflation still remains above the target and being within the tolerance band (2-6%) is not enough. …. . As Mahatma Gandhi had said, ‘The ideal must not be lowered. ’ The continuation of the stance of withdrawal of accommodation should be seen from this perspective,” said Das.
He said that going forward, with the recent rabi harvest remaining largely immune to the adverse weather events, the near-term inflation outlook looks more favourable than at the time of the April monetary policy committee meeting.
The governor said the forecast of a normal south-west monsoon by the IMD augurs well for the kharif crops but added that uncertaintiesremain on the spatial and temporal distribution of monsoon and on the interplay between El Nino and the Indian Ocean Dipole. “Geopolitical tensions, uncertainties around the monsoon and international commodity prices, especially sugar, rice and crude oil, and volatility in global financial markets pose upside risks to inflation,” said Das.
“Taking into account these factors and assuming a normal monsoon, CPI inflation is projected at 5. 1% for2023-24,” said Das.
RBI governor said domestic demand conditions remain supportive of growth on the back of improving household consumption and investment activity. Urban demand remains resilient, with indicators such as passenger vehicle sales, domestic air passenger traffic, and credit cards outstanding posting double-digit expansion on a year-on-year basis in April. Rural demand is also on a revival path — motorcycle and threewheeler sales increased at a robust pace (YoY) in April, while tractor sales remained subdued, he said.