23 July 2025: PIB Summary For UPSC
1. Government and RBI have taken key monetary and fiscal measures to control inflation and mitigate its impact on common citizen
Source – Press Information Bureau (PIB) – Ministry of Jal Shakti (23 July 2025)
|
Topic: GS 3 – Indian Economy (Monetary & Fiscal Policy; Inflation Management) |
|
Context |
|
Content:
Background & Data
-
CPI inflation over the last three quarters:
-
Q3 FY25: 5.6%
-
Q4 FY25: 3.7%
-
Q1 FY26: 2.7%
-
-
WPI inflation in same period: 2.5%, 2.4%, 0.4% respectively.
-
RBI’s flexible inflation targeting framework aims at 4 ±2% CPI; inflation remained within this band.
Coordinated Policy Measures
A. Monetary Policy (RBI)
-
Raised repo rate cumulatively by 250 bps (4% → 6.5%) between May 2022–Feb 2023, maintained till Jan 2025.
-
Starting Feb 2025, RBI cut the repo rate by 100 bps to encourage growth as inflation moderated.
B. Fiscal & Administrative Interventions (Government)
-
Stockpiled buffer stocks of essential commodities.
-
Conducted strategic open-market grain sales.
-
Managed import-export via import facilitation or export curbs during scarcity.
-
Enforced stock limits to boost commodity supply.
-
Offered subsidised Bharat-brand food products.
-
Provided free food to ~81 crore NFSA beneficiaries.
-
Increased disposable income through tax exemption: up to ₹12 lakh for individuals, ₹2.75 lakh for salaried after standard deduction.
Impact & Analysis
-
FY25 retail inflation fell from 5.4% (FY24) to 4.6%, marking a six‑year low
-
June 2025 CPI recorded at 2.1%, the lowest in six years
-
WPI dropped to a low of 0.4% in Q1 FY26
Analysis:
These measures reflect a sensitive and well-coordinated use of monetary tightening followed by easing, supported by fiscal and administrative actions. This combination effectively addressed inflation without derailing growth—a policy framework aligning with macroeconomic stability principles.
Conclusion
-
The success in controlling inflation within the RBI band demonstrates effective policy synergy.
-
Continued vigilance is required: monitor global inflation trends, commodity prices, and ensure buffer stock readiness.
-
Going forward, the policy mix must balance inflation management with sustainable growth, especially as fiscal easing continues.
|
Practice Question: “Critically analyze the combination of monetary and fiscal measures used by India in FY25–26 to manage inflation. In your answer, discuss the effectiveness of flexible inflation targeting and suggest strategies to sustain low inflation without hampering growth.” |
Check this out 22 July 2025: PIB Summary For UPSC
