Terming general price rise as India's biggest fiscal concern, a top advisor to the prime minister and former central bank governor on Tuesday said inflation, nevertheless, would moderate to around 6.5 % by the end of December from around 9 % now.
“My expectation is that by the end of December, the headline inflation will come down to somewhere near 6.5 %,” C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, told reporters in New Delhi.
"Inflation remains the biggest challenge for the country's economic policy-makers," he said on the sidelines of a conference on inclusive growth co-organised by the finance ministry and National Institute of Public Finance and Policy in the Capital.
He said while the Indian economy grew 8.9 % each in the first quarters, inflation remained nearly five % higher than the comfort zone of 4 % despite some moderation in recent months.
“We are hoping it will come down to a reasonable level. However, until that happens it is a matter of big concern,” he said, adding the central bank might further tighten the monetary policy if inflation does not come under the comfort zone.
“The RBI action will depend on behaviour of inflation in the month of December.”
India's annual rate of inflation based on wholesale prices fell a tad to 8.58 % in October from 8.62 in the previous month. But it is still much above the central bank's comfort level despite an aggressive tight money policy since January.
The apex bank had hiked both its short-term borrowing and lending rates by 25 basis points each Nov 2, tweaking its policy rates for the sixth time since the start of this calendar year to curb inflationary expectations.