Reason for the smile.

"Retail inflation galloped to 6.95% in March from 6.07 percent in the previous month on the back of hardening food prices," ET. "The RBI, in its latest monetary policy review, has revised upwards its inflation projection to 5.7% from 4.5% earlier on the back of oil and commodity prices globally." "More specifically, food price inflation in rural areas has more than doubled, from 3.94% in March 2021 to 8.04% in March 2022," ET. "Inflation in 'oils and fats' rose to 18.79%" and "Vegetable inflation surged to 11.64% in March while in 'meat and fish' the rate of price rise stood at 9.63 compared to February 2022." In the latest meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on 8 April, interest rate was left "unchanged at 4% for the 11th straight time," ET. The RBI increased its inflation forecast to 5.7% from 4.5% in February. In the US, "The Labor Department said...that its consumer price index jumped 8.5% in March from 12 months earlier, the sharpest year-over-year increase since 1981. Prices have been driven up by bottle-necked supply chains, robust consumer demand and disruptions to global food and energy markets worsened by Russia's war against Ukraine," ET. "The Federal Reserve is expected to deliver two back-to-back half-point interest rate hikes in May and June to tackle runaway inflation," Reuters. So, the reactions of central banks in the US and India are diametrically opposite, with Fed Chair Jerome Powell promising an aggressive response to inflation, CNBC, while Governor of RBI Shaktikanta Das promised to maintain accommodative monetary policy with a happy smile, ET. The unemployment rate in the US has plunged to 3.6%, according to the Bureau of Labor Statistics. "The Centre for Monitoring Indian Economy's monthly time series data revealed that the overall unemployment rate in India was 8.10 percent in February 2022, which fell to 7.6 percent in March," ET. The population of India being more than 4 times that of the US, it means a slight fall in unemployment translates to many more consumers. "US consumer spending increased more than expected in January, offering the economy a strong boost at the start of the first quarter," Reuters. Consumer spending in India also increased sharply in January 2022, tradingeconomics. The argument for a loose monetary policy in India is that rising prices are due to restrictions in supply and hence increasing the cost of borrowing will not decrease prices by increasing supplies. The US government distributed $2.2 trillion, $900 billion and $1.9 trillion in stimulus money which is partly responsible for rising prices, Forbes. A recent paper by the IMF suggests that free food distributed under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) has drastically reduced severe poverty, News18. If poor people do not have to spend for food that frees up any money they have for other spending. A huge stimulus. High prices assisted in elevating GST collections to a record Rs 1.42 trillion in March, ET. Helps the government. Hence the happy smile.