No definite correlation between growth and inflation: Govt
Allaying apprehensions that when the country's economy enters the growth trajectory of over 7 percent it will lead to higher inflation, the government has said there need not be a correlation between the two.
New Delhi: Allaying apprehensions that when the country's economy enters the growth trajectory of over 7 percent it will lead to higher inflation, the government has said there need not be a correlation between the two.
"...High growth of GDP of 9.3 percent and 8.6 percent in the years 2007-08 and 2009-10, respectively have been witnessed with lower rate of inflation," Planning Minister Rajeev Shukla has said in a written reply to the Rajya Sabha.
"Therefore it in not necessary that if the growth rate of GDP is beyond 7 percent, the rate of inflation will also rise," he added.
The minister was replying to a question asked by Deputy Leader of BJP in the Rajya Sabha, Ravi Shankar Prasad.
He asked: "Whether it is a fact that with annual growth rate of GDP going beyond 7 percent, the rate of inflation in the country is also apprehended to rise?"
The minister's statement revealed that the inflation was 4.74 percent in 2007-08, when economy grew at a rate of 9.3 percent. Also, the rate of price rise based on Wholesale Price Index was 3.8 percent in 2009-10 when GDP grew at 8.6 percent.
However, the statement also revealed that inflation was 9.56 percent in 2010-11, when the economy grew by 9.3 percent; and 8.05 percent in 2008-09, when the economy grew at 6.7 percent.
Further, the inflation was 8.94 percent in 2011-12 when economy grew at 6.2 percent, and 7.35 percent when the GDP expanded at 5 percent.
The minister also said: "The increase in the rate of inflation does affect the lives of the majority of the people by reducing the purchasing power.
"The government and Reserve Bank of India have undertaken several fiscal, administrative and monetary measures in order to control inflation. As a result of these measures, the rate of inflation (WPI) has declined to 5.96 percent in March 2013, the lower level in the last three years."