Price stability key to recovery for India, other G-20 nations

Price stability key to recovery for India, other G-20 nations

Toronto: Amid concerns over sustaining the recovery through domestic consumption, the world’s most influential leaders have asked their grouping, G-20, to work for price stability - a key challenge for India grappling with double-digit inflation.

“Monetary policy will continue to be appropriate to achieve price stability and thereby contribute to the recovery," the declaration by G-20 leaders said on Monday after their two-day summit here.

India is battling high overall inflation which touched 10.16% in May, while food inflation is above 16%. The government’s chief economic adviser himself estimated that last week’s decision to raise fuel prices would stoke inflation by 0.9 percentage points.

The Reserve Bank of India (RBI) is scheduled to review monetary policy on 27 July amid expectations of rise in key policy interest rates.

Though India, as Prime Minister Manmohan Singh said, is on the way to returning to 9% economic growth, sustaining it with strong demand would require a fine balancing act.

“The path of adjustment must be carefully calibrated to sustain the recovery in private demand," the declaration said.

Sustaining private demand amid stress on government finances in several European countries remains a major challenge for the global economy.