Reserve Bank of India Deputy Governor K C Chakrabarty said today the weak southwest monsoon could put upward pressure on inflation.
“The expectation is there (of upward pressure on inflation). The erratic monsoon may put pressure on inflation,” Chakrabarty said on the sidelines of a meeting of regional rural banks. India is facing a severe drought situation as the southwest monsoon has been way below normal. As on August 12, the overall rainfall in the country was 29 per cent below normal.
RBI has projected the headline inflation rate based on Wholesale Price Index (WPI) to rise to around 5 per cent by March. India’s headline inflation rate is currently at an over three-decade low of (-)1.74 per cent. The RBI deputy governor said the impact of weak monsoon on the economy could be offset, to some extent, by adequate steps.
“Everybody needs to take precaution. It depends on how we utilise the existing irrigation potential and bring the short-duration crops,” he said.