Taming inflation: How Union Budget can address economic challenges

By easing supply-side constraints and using counter-inflationary tariff policy, the finance ministry can ensure prices remain in check

Budget 2025 will be presented against the backdrop of a cyclical slowing of growth to a two-year low (5.4 per cent in Q2-FY25) and persistent concerns over inflation. This two-front economic challenge and the appropriate monetary policy response to deal with it have led to sharp differences of opinion within the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC) and among economists.

 

Very little attention is being paid to the role of the fiscal authorities in mitigating the costs of the inflation-growth trade-offs. Budget 2025 is an opportunity to address some of these dilemmas and, in the process, improve