Inflation is expected to come down to the acceptable level of 5 to 5.5 per cent after four months due to an anticipated good monsoon and measures taken by the government and the Reserve Bank of India, Prime Minister's Economic Advisory Council Chairman C Rangarajan said on Monday.
"Inflation is likely to come down to 6 per cent in the next three to four months. Thereafter it can come down to 5-5.5 per cent depending upon the monsoon and other sectors," he told reporters here on the sidelines of an international tax conference.
It is not only due to monetary measures announced by the Reserve Bank, but due to other factors as well, he said. Also, it would be due to the base effect, as inflation was rising at a slower rate at this time last year. Despite all assumptions, it would come down, he said.
"Much will depend on the monsoon, on the way the output behaves. It is possible to go down to 5 to 5.5 per cent. At present, the expectations are that the monsoon will be good," he said. On the impact of fiscal measures taken by the government to curb inflation on tax collections, he said, "there will be, of course, some impact of fiscal measures but I think it could be taken care of."
He also said the high oil crude oil prices, which have crossed $120 a barrel, could slow down the gross domestic product growth though it would not "derail" the growth process. "I think high oil prices will have its impact (on GDP growth). It could slow down growth," he said.