The Reserve Bank Of India (RBI) said that India is likely to face elevated inflation risks from supply bottlenecks and lingering threats to economic expansion. The country in recent times has also seen a price rise in many of the essential commodities which includes fuel.
The central bank in its Financial Stability report released in Mumbai on June 28 said, “Threats to stability are posed by the global sovereign debt problem and risk aversion, domestic fiscal position, widening current-account deficit and structural aspects of food inflation”. The financial system has become robust and the challenges to increase the stability has also become difficult.
Moreover, even the growth in the economy which is considered as Asia’s third largest economy slowed a near decade low last quarter. The economy has been hurt by the global recovery and political gridlock which has deterred investment and price pressures.
Pranab Mukherjee has given up from the Finance ministry to contest for presidential elections, while Prime Minister Manmohan Singh taken charge three days back. Singh will have to face a budget deficit requiring record borrowing and a trade shortfall while he tries to try his development agenda. The new Finance minister has also pledged to restore confidence in India.