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Inflation likely to moderate in weeks: Montek

The Planning Commission deputy chairperson also expected the Indian economy to grow between 8 and 8.5 per cent in the current financial year, HT reports

business Updated: May 06, 2008 21:56 IST

The government, which expects prices to moderate in the coming weeks, would be willing to consider more measures to tame inflation, planning commission deputy chairperson Montek Singh Ahluwalia said in New Delhi on Tuesday.

India’s inflation rate shot up to a three-and-a-half-year peak of 7.57 per cent, driven primarily by higher food and metal prices. “We are not at all happy with the rate of inflation. It should come down. Government can take more measures if needed,” Ahluwalia said on the sidelines of a book release function.

The Planning Commission deputy chairperson also expected the Indian economy to grow between 8 and 8.5 per cent in the current financial year. “My projection (for growth in 2008-09) was 8 to 8.5 per cent. I will be happy at the lower end. A growth of around 8 per cent is quite acceptable,” he said.

Delhi-based economic think-tank National Council for Applied Economic Research (NCAER) has projected India’s gross domestic product (GDP) growth to be between 8.5 per cent to 8.8 per cent in 2008-09, but felt the annual inflation rate could be higher than last year.

Economists expect prices to moderate marginally in wake of the good procurement.

The wholesale price index (WPI)-based inflation rate has hovered above 7 per cent in the last few weeks, forcing authorities to take a series of fiscal and monetary steps.

The government has banned export of certain basic staples like rice and lentils and cut customs duties on other items to try to rein in inflation.

Last week the Reserve Bank of India (RBI) raised cash reserve ratio (CRR), the amount of funds banks have to keep as deposit with the central bank, by 0.25 percentage points to 8.25 per cent to tame inflation.

The government’s Left allies have also been demanding a ban on futures trading of commodities to contain prices, but Ahluwalia said such trading does not lead to higher prices of commodities.

Ahluwalia said the government is examining the report of the expert committee on futures trading headed by Planning Commission member Abhijit Sen.