Over the past few weeks since assuming office in May, the Modi government has taken a slew of steps to attack price rise. Besides restrictions on exports of certain food items such as onions and potatoes, the Centre also announced in early July that the hoarding of essential commodities could be made a non-bailable office offence.
Potential spoilersThe inflation estimate in the Budget, however, shows that the Finance Ministry is not confident that these measures will effectively cool prices.
One reason for this could be the uncertainty around global crude prices following the Iraq crisis, something that the Budget documents mention as potential spoiler for its estimates. Another could be the possibility of a drought.
GDP growthThe documents reveal that the Budget estimates the nominal GDP growth for the current fiscal to be 13.4 per cent. The GDP is estimated at Rs. 1,28,76,653 crore.
ProjectionsThe budget documents as well as the Economic Survey Union Finance Minister Arun Jaitley tabled in Parliament this week project the real GDP growth rate to be in the range of 5.4 per cent to 5.9 per cent.
The rate of inflation is thus projected to in the range of 7.5 per cent to 8 per cent as in Economic Theory the real GDP is the difference of between the nominal GDP and inflation.
