‘It’s a flawed theory...’: Piyush Goyal questions RBI’s food inflation caution, Governor Shaktikanta Das responds

Union Commerce Minister Piyush Goyal on Thursday called for an interest rate cut, arguing the Reserve Bank of India (RBI) should disregard food inflation when making its decision.

“RBI must cut interest rates. It’s a flawed theory to consider food inflation for making a choice on cutting rates. This is my personal view and not that of the Government,” the minister said at the CNBC-TV18 Global Leadership Summit on November 14. 

He, however, clarified that it was his personal stance on the issue. Goyal, speaking on inflation trends, assured that prices would ease by December, stressing that India has experienced its lowest inflation levels under the Modi government since independence. 

"Inflation under Modi Government has been the lowest since India's Independence," he said, taking a firm stance on the administration’s economic performance.

Addressing the recent outflows by foreign institutional investors, Goyal urged a more patient, long-term perspective. "Investors should take a long-term view and not at the quarterly picture," he advised, hinting that transient market fluctuations should not overshadow India’s long-term growth potential.

RBI Governor Shaktikanta Das, who also spoke at the summit, offered a more cautious perspective. Das reiterated the central bank’s careful stance on rate cuts, warning that any move to lower rates prematurely would be “very, very risky.” 

He described the ongoing challenge for central banks to balance intervention timing, noting, “The challenge for central bankers has always been between doing too little or too late on the one hand, and too much and too early on the other.”

India’s annual retail inflation spiked to 6.21% in October, surpassing the RBI's tolerance range and largely driven by food costs. The RBI’s current repo rate stands at 6.5%, with the next review set for December.