Rethinking Food Inflation: A Complex Policy Debate

Nilesh Shah, a part-time member of the Economic Advisory Council to the Prime Minister, raises important questions about food inflation's inclusion in policy formulation. Shah highlights the complexity of food inflation measurement and calls for detailed plans to boost capital expenditure and improve domestic business conditions.

Nilesh Shah, part-time member of the Economic Advisory Council to the Prime Minister, has sparked a debate on including food inflation in policy formulation. Shah questioned the accuracy of food inflation computation, considering free food distribution under the Pradhan Mantri Garib Kalyan Anna Yojana.

While EAC-PM is yet to deliberate on the issue, Shah noted that food inflation is complex and insisted on examining if it is measured correctly. He pointed out the difference in practices worldwide, with the U.S. focusing on core inflation due to lower food spending. Shah advocated for the RBI and Finance Ministry to decide on the matter.

Shah also urged for plans to boost capital expenditure in the fiscal year's latter half. He observed slower growth in GST collections and warned against expecting the high mutual fund returns seen in previous years. The US-China tariff war is seen as an opportunity for India, but domestic business conditions need improvement.

(With inputs from agencies.)