Prediction of normal Monsoon positive for easing price pressures: FinMin in monthly economic review

The Finance Ministry, in its monthly economic review, said that the prediction of a normal Southwest Monsoon also augers well for food production and easing of price pressures in the coming months.

"The prediction of a normal Southwest Monsoon augers well for food production and easing of price pressures. With the assumption of a normal monsoon, the RBI forecasts a 4.9 per cent retail inflation for FY25’s first quarter. The positive indications in the farm sector should help India firewall against any adverse pressures that may arise from geopolitical tensions and global commodity prices. Likewise, the strong macro-economic buffers of India should help the real sectors of the economy navigate the external headwinds smoothly and continue the growth momentum of the previous year," the ministry said in its note. 

In its March economic review, the Finance Ministry said it is expecting further easing of food prices as India Meteorological Department (IMD) has predicted above-normal rainfall during the monsoon season.

The April review also highlighted India's ability to deal with adverse pressures from geopolitical tensions, while continuing to make progress on its growth numbers.

"The positive indications in the farm sector should help India firewall against any adverse pressures that may arise from geopolitical tensions and global commodity prices," the Finance Ministry said.

Amid the raging employment debate amid the poll battle, the Finance Ministry said that present job trends in India are "reassuring." "While the urban unemployment rate declined y-o-y during the quarter ending March 2024, the labour force participation rate and worker-to-population ratio have improved," the ministry noted. 

Talking about inflation's trajectory, the ministry said going forward, it would be influenced by several factors, including government initiatives, open market sales, monitoring of stocks, import of pulses, and export restrictions.