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Sunday, Dec 15, 2019

Eco growth at 8-8.5%, inflation to fall in 3-months

A senior Govt official says inflation is expected to reduce to 6 pc in the next three months from the present high-level of over 7.5 pc.

business Updated: May 03, 2008 16:11 IST


Inflation is expected to reduce to 6 per cent in the next three months from the present high-level of over 7.5 per cent, while the country's economy is expected to grow at 8-8.5 per cent despite the global turbulence, a senior government official said.

"Inflation has reached uncomfortable levels and several actions have been taken on the monetary and fiscal sides. I think in the next three months it (inflation) could come down to six per cent," Prime Minister's Economic Advisory Council Chairman, C Rangarajan, told reporters on the sidelines of an SME conference in Mumbai on Saturday.

Rangarajan said while the impact of the fiscal and monetary measures taken to contain inflation would take some time to show results, a good procurement and reasonably good monsoon expectation would also contribute towards moderating inflation.

"I do think that apart from the impact of fiscal and monetary measures, procurement has been good and the monsoons are expected to be reasonably good," Rangarajan said, adding that this too would help in moderating inflation.

He said the base effect on food price index has also caused the exaggerated inflation figure.

However, despite the slowdown globally, the country's economy is expected to grow at 8-8.5 per cent, Rangarajan said.

Disturbances in domestic and international markets might slow down growth slightly, he said.

"I think the economy will grow at 8-8.5 per cent. In fact, the Economic Advisory Council has estimated the growth at 8.5 per cent three to four months back...I think it is achievable," he said.

Earlier in his speech at the conference, Rangarajan said credit flow from the banking sector to small and medium enterprises was still inadequate and wanted banks to enhance credit disbursals to SMEs besides launching state-level venture capital funds for small-scale units.

Rangarajan also urged SEBI to swiftly set up a separate exchange for SMEs.