A senior global official has warned that major food and energy price disruptions could threaten the stability of India’s economic growth as rising prices account for a larger portion of expenditures, according to The Wall Street Journal. On Monday, the International Monetary Fund’s Asia and Pacific Department Director, Anoop Singh, warned that surging energy prices and higher global commodity prices were putting a strain on inflationary pressure across the region, but warned that India is “particularly vulnerable to food and energy price disruptions.”
The Reserve Bank of India has forecast for economic growth of 8.2% during 2011, lowering its previous forecast due to sustained inflationary pressure. The IMF expects consumer prices to add 7.5% in 2011 before inflation eases to 6.9% the following year. Singh advised Indian officials that fiscal policy will be a helpful tool in stabilizing the country’s economic and inflationary outlook, but continued, “Reaching this year’s deficit target will be more challenging,” as spending target may be lifted. The government is aiming to keep its deficit to 4.6% of gross domestic product.