Would Narendra Modi be re-elected as PM again despite low inflation during his tenure as India’s premier.
That’s because low inflation has been driven by falling food prices, cutting farmers’ incomes and pushing up debt levels. About 800 million of India’s 1.3 billion population depend on farming for their livelihood. On the plus side, the slowdown in inflation raises the prospect of another interest-rate cut in April, providing Modi with a much-needed boost to the economy.
“A more-than-expected pickup in inflation and stable core is likely to make the monetary policy committee stay on the gradual rate-cut path rather than aggressive front-loading,” Citigroup economists led by Samiran Chakraborty said in a note. “Our base case remains for a 25 basis-point cut in April and possibly June too.”
His administration tackled hoarders and carried out agriculture marketing reforms that have helped to break the monopoly of licensed traders and lowered marketing costs for farmers.The introduction of a goods and services tax in July 2017 has also brought down food transportation costs, according to Pranjul Bhandari, chief India economist at HSBC while bumper harvests, both at home and abroad, have helped keep food prices tame.