Stable Prices: India Tames Inflation Amid Turmoil

 

Amid global economic uncertainties and regional tensions, India’s recent inflation data offers a rare bright spot. Retail inflation dipped to a six-year low of 3.16% in April 2025, while wholesale price inflation (WPI) fell to a 13-month low of 0.85%. These figures underscore the success of the Modi-led NDA government in maintaining price stability, a stark contrast to the high inflation era under the previous UPA regime. Official data reveals that since 2014, retail inflation has consistently remained below 6%, averaging significantly lower than the UPA’s 8.1% between 2004 and 2014. This achievement reflects targeted policies like the PM Garib Kalyan Anna Yojana, Bharat brands for affordable staples, and the Price Stabilisation Fund, which have shielded consumers from volatile food and fuel prices.

 

The decline in inflation is particularly notable in essential categories. Food inflation eased due to deflation in vegetables (-18.26%), pulses (-5.57%), and potatoes (-24.30%), while fuel prices benefited from global crude oil trends and domestic subsidies. The government’s proactive measures, such as open market sales of wheat and rice, have further stabilised supply chains. Economists attribute this resilience to structural reforms, including agricultural modernisation and efficient distribution networks, which have dampened seasonal price spikes.

 

In stark contrast, Pakistan grapples with runaway inflation, which soared to 38% in 2023 and has remained stubbornly high since then. The crisis stems from a combination of external debt burdens, currency depreciation, and energy shortages, exacerbated by political instability. Unlike India’s buffer stocks and subsidy mechanisms, Pakistan’s ad-hoc policies, such as abrupt import restrictions, have worsened food shortages. The IMF’s austerity demands have further squeezed households, with fuel and electricity prices skyrocketing. While India’s WPI and CPI convergence signals balanced demand-supply dynamics, Pakistan’s disjointed fiscal and monetary policies fuel inflationary spirals.

India’s diversified trade partnerships and robust forex reserves have provided a buffer against external shocks, whereas Pakistan’s reliance on bailouts leaves it vulnerable to global pressures. The monsoon’s timely arrival and agricultural reforms further bolster India’s food security, while Pakistan’s water mismanagement and outdated farming practices exacerbate its crises.

 

India’s inflation control also bolsters broader economic stability. With nominal GDP growth projected at 9% for FY2026, the country is poised to outpace peers. Pakistan, however, faces stagflation risks, with growth stagnating at 2% amid double-digit inflation. The divergence highlights the importance of governance: India’s institutional reforms and long-term planning have cushioned shocks, while Pakistan’s stopgap measures deepen vulnerabilities.

 

As geopolitical tensions simmer, India’s ability to curb inflation offers a model for emerging economies. Yet, the challenge remains to sustain this momentum amid climate risks and global volatility. For Pakistan, the lesson is clear—without structural overhauls and political consensus, economic relief will remain elusive.