Inflation | Decoding the dynamics – Deepak Mohanty



Higher subsidy translates into higher fiscal deficit, which has inflationary implications



While inflation is expected to moderate towards the later part of the year, reflecting monetary tightening and likely softening of global commodity prices, fiscal policy needs to be supportive in containing aggregate demand. In addition, there is an urgent need to address the issue of structural supply constraints, particularly in agriculture, so that these do not become binding constraints in the long run, hampering the task of inflation management.

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