Chief Economic Advisor VA Nageswaran today said that India should be prepared for for tighter financial conditions globally as monetary policy tightening may halt in second half of new financial year. His statement came after data released by the National Statistical Office showed that the GDP growth has slowed down to 4.4 per cent in the December quarter.
Citing uptick in inflation data and uncertainity in monsoon, the CEA said the country should get ready with supply side and monetary policy measures in the next financial year to tackle inflation uncertainty.
“There have been slight uptick in the inflation data for January and RBI has also maintained its forecast that inflation will come down gradually and we do have some uncertainty related to monsoon because of El Nino activity. So we should be ready with supply side and monetary policy measures in the next financial year,” the CEA said
He though added that the inflation is softening and will gradually come down. He further added that in the second half the monetary policy tightening may come to a halt and may even reverse, leading to improvement in capital flow and lower oil prices. The CEA also a normal monsoon and a good harvest will further ease food inflation.
The CEA said that the net FDI inflows is expected to be between $40-45 bn in FY23.