Banking on monsoon, PM expects inflation to drop by Dec
Under attack for surging prices particularly of food items, the government today said it expects good rains to help halve inflation to six per cent by December.delhi Updated: Jul 24, 2010 11:32 IST
Under attack for surging prices particularly of food items, the government on Saturday said it expects good rains to help halve inflation to six per cent by December.
"We expect to see the rate of inflation in wholesale prices to come down to around 6 per cent by December," Prime Minister Manmohan Singh said in his opening remarks at the meeting of the National Development Council, being attended by several central ministers and most of the chief ministers.
His remarks come ahead of the monsoon session of Parliament, which is expected to be stormy over issues including price rise.
He said the government has taken a number of steps to curb price rise. "With normal monsoon, which is the expectation at present, the rate of inflation in food prices will abate in the second half of the year," Singh said.
Monsoon accounts for around 80 per cent of rains India receives and nearly 60 per cent of the cultivated land is rain-fed. Two years of poor rains had led to an upward spiral in food prices, the effect of which spread to manufactured goods.
Food inflation is above 12 per cent and overall rate of price rise is above 10 per cent, giving the Opposition parties enough ammunition to corner the government in the Parliament session beginning Monday.
On the pace of economic growth, he said the country's gross domestic product is expected to expand by 8.1 per cent during the 11th Five Year Plan period (2007-12) against the targeted nine per cent.
"This is lower than the target of nine per cent, but still the highest achieved in any plan period," he said.
India's economic growth slowed down during 2008-09 to 6.7 per cent from over nine per cent since 2005-06 due to the global financial crisis. However, stimulus packages to boost demand pushed it up to 7.4 per cent last fiscal. Economic growth is expected to be 8.5 per cent this fiscal.
On tax reforms, the Prime Minister appealed to chief ministers to extend their support to the Goods and Services Tax (GST), which the government wants to implement from the next fiscal.
Since the introduction of GST would require constitutional amendments and ratification by at least half of state assemblies, the support of chief ministers, particularly NDA-ruled states is crucial for radical reforms.
The meeting of the NDC, the country's highest policy making body, was called to review the progress of the 11th Plan and set right anomalies, if any.