Suresh Tendulkar optimistic of economic recovery in six months

Pune: Prime minister's economic advisor Suresh Tendulkar on Saturday predicted that the Indian economy would recover in the next six months. "After the return of the UPA government at the Centre with comfortable margin, the prospects of political and economic stability have further improved the outlook for an early recovery hopefully during the next six months," he said at a convocation ceremony of the National Institute of Bank Management (NIBM) here.

The slowdown has been offset in varying degrees by rapid changes in monetary policy rates and deployment of other monetary packages in December 2008, January 2009 and again after the interim budget in February, he said. "Public sector banks are slowly lowering their lending rates".

No concern of deflation says RBI governor

Pune: Even as the inflation fell to a three-decade low of minus 1.61 per cent, Reserve Bank Governor D Subbarao said there is no threat of deflation as food and crude oil prices are still firm.

"India does not suffer from any demand constraints, therefore there is no concern of deflation," Subbarao told reporters here.

Although wholesale price index is negative, there are certain parts of the index, like food articles, where inflation is significant, he said.

At the same time, oil prices are firming up, he said, adding there is talk that world food production will be lower than the trend.

"We will take into account all these developing trends in the July review," he said.

According to the RBI annual monetary policy, inflation is projected at four per cent at the end of March 2010.

The annual rate of inflation, calculated on a point-to-point basis, stood at minus 1.61 per cent for the week ended June 6 as compared to 0.13 per cent in the previous week and 11.66 per cent during the corresponding week of previous year.

However, food articles were costlier by 8.7 per cent from the comparable week last year as pulses moved up 17 per cent, cereals 13.5 per cent, and fruit and vegetables 10 per cent.