“It is important to note to be more discerning with the data from a wide suite of high frequency indicators, there will be variations in different points of time. We all know that government spending was curtailed for a quarter during the election time. So this is a timing issue. It is not a structural change,” Parekh said at CNBC’s Global Leadership Summit on Thursday, November 14.
The government’s total expenditure for the April-September period stood at ₹21.12 lakh crore, slightly down from ₹21.19 lakh crore in the previous year. Spending has been lower due to general elections conducted earlier this year. Parekh expects the capex figures “to gain traction from here on.”
The last few weeks have been data-packed for India, with key economic indicators such as GDP growth, inflation rates, IIP (Index of Industrial Production), and trade deficit figures being released, providing crucial insights into the country’s economic health.
Parekh referred to last month’s spike in the Consumer Price Index (CPI) inflation, which reached 6.21%, significantly above September’s rate of 5.5% and above the Reserve Bank of India target rate of 4%.
“Inflation rate will start coming off from December onwards, especially when the base effect becomes more favourable,” he said.
The financial industry veteran also said he hopes to see rate cuts sooner rather than later, suggesting that a even a cut in the cash reserve ratio (CRR), a key tool that the RBI uses to regulate the money supply, inflation, and liquidity in the economy, would help the economy.
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(Edited by : Shoma Bhattacharjee)
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