Planning Commission deputy chairman Montek Singh Ahluwalia on Sunday conceded that he went wrong while projecting moderation in inflation which remains near the double-digit mark.
"It is true that we were hoping that this (moderation in inflation) will happen earlier, to that extent our credibility becomes a question," he told Karan Thapar in a interview for CNN-IBN's TV programme 'Devil's Advocate' when asked why government's repeated projections on inflation proved false.
"You should recognise that short-term forecast is subject to error," he said. He, however, asserted inflation would moderate to 7-7.5% by March, 2012.
Headline inflation has remained over nine per cent for several months and was 9.73% in October. The food inflation stood at 10.63% for the week ended November 5.
Inflation has remained stubbornly high despite repeated assurances by several government functionaries that it would moderate.
Responding to criticism of India Inc that there was a policy paralysis in the government, Ahluwalia said, "Industry has been a lot more focused on decisions that are holding up infrastructure projects, and not the (financial) reforms".
The government, he said, "is keen to push (reforms) ahead but needs to develop political consensus and if the measures like GST, DTC and other reforms are delayed, that does not mean that they wound not happen."
On opening up the multi-brand retail sector for foreign investment, Ahluwalia expressed the hope that the government would take a decision by the end of next month.
"I am hopeful", he said, when asked whether the government would be able to take a decision on allowing foreign direct investment (FDI) in multi-brand retail. The decision to allow FDI in retail has been pending for long.
As regards the economic growth, Ahluwalia said it would moderate in the backdrop of sluggishness being witnessed in the developed world.
The growth, he added, could moderate to 7-7.5% during the current fiscal, as compared to 8.5% in 2010-11.
"I think that it (growth) will range between 7-7.5%. We have to do something about it. It is difficult to know when the turnaround will come," he said.
Ahluwalia further said it would be difficult for the government to restrict fiscal deficit to 4.6% of the Gross Domestic Product (GDP) during 2011-12, in view of rising oil prices and burden on subsidy.
Answering questions on recent decision of Moody's to lowering rating of Indian banking system to 'negative' to 'stable', he said "it was part of knee-jerk response".
Ahluwalia also raised concern about rising trade deficit and said it could increase to USD 150 billion by the end of the current fiscal.
However, he added, India has enough cash reserves to handle the situation arising from surge in trade deficit.