"Extreme Insensitivity": Jairam Ramesh On Piyush Goyal's 'Cut Interest Rate' Remark

During the CNBC-TV18 Global Leadership Summit on Thursday, Commerce Minister Piyush Goyal said that it is a “flawed theory” to consider food inflation when the Reserve Bank of India (RBI) must cut interest rates and. Responding to his comments, Congress leader Jairam Ramesh called it “extreme insensitivity.”

“Aside from raising concerns about the RBI independence, this statement also shows extreme insensitivity,” stated Ramesh.

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Highlighting the significance of food inflation in the budget of an Indian family, Ramesh said, “Food inflation has been raging for quite some time now and has crossed double digits. It is a very large component of the budgets of India’s families and absolutely needs to be considered when setting monetary policy rates.”

“The non-biological PM’s Government knows only one trick: if the data doesn’t suit them, they will change the data altogether,” the Congress leader added.

A senior and influential minister is publicly saying that the RBI should NOT consider food inflation while determining interest rates.

Aside from raising concerns about the RBI’s independence, this statement also shows extreme insensitivity. Food inflation has been raging for…

— Jairam Ramesh (@Jairam_Ramesh) November 14, 2024

The Union Commerce Minister clarified that these were his personal views and not that of the government. He also pointed to a similar recommendation by the chief economic adviser in his Economic Survey in July.

The 2023-24 survey stated that the country’s monetary policy framework should consider “targeting inflation that excludes food, the prices of which are influenced more by supply than demand.”

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The RBI’s consumer price index (CPI)-based inflation is currently mandated to keep inflation at 4 percent with a two percentage point tolerance on either side.

India’s retail inflation unexpectedly rose to a 14-month high of 6.2 percent in October, witnessing a 5.5 percent spike in September. An official data release on Tuesday stated that an increase in vegetable, fruit, and edible oil prices was the main cause behind the price hike.