Inflation Likely To Come Down To 7% By May, 2011:
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The PMEAC Chief expects that inflation was softening, particularly in food commodities and results would be visible in couple of months. I think the inflation numbers will show some decline in the month of March but certainly by April or May. Weekly data that are available indicate that the food price inflation is coming down, Rangarajan said while talking to media persons on the side lines of an industry event.
Rangarajan, a former Governor of the Reserve Bank of India (RBI) himself, said that since food price inflation was persistent for a long time it was also getting extended to the manufacturing side that was why the overall inflation was not coming down as fast we expected. But certainly by April-May we should be closer to 7%, Rangarajan said adding that measures taken by the government and the RBI will show impact going forward.
Inflation remains the biggest problem facing Indian policy makers. High and sticky inflation has also led most researchers to downwardly revise growth forecast for India. Most recently, the International Monetary Fund (IMF) had lowered growth projection for India by about 30 basis points owing to high inflation and potential further monetary tightening by the central bank. The RBI has already hiked its policy rates eight time last fiscal and is expected to continue the fight against inflation deep into 2011 as well.
In context of the government having any plans to deregulate diesel prices within current financial year, Rangarajan stated that the fiscal numbers indicated in the budget clearly showed that there would be some policy decisions relating to petroleum products during the year. However, the timing of the decision will depend on when the inflation rate falls. I think some policy action relating to the petroleum and diesel prices will have to be taken during the course of the year, he said.
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