Inflation to come down to 6% assures Pranab
ASHOK B SHARMA
TIA
NEW DELHI: The finance minister, Pranab Mukherjee on Tuesday said that the price inflation in the country would stabilize at 6% on annualized basis towards the end of the year. The ideal price inflation rate according Mukherjee is 4% to 5%.
Speaking at the Economic Editors Conference organized jointly by his ministry and the Press Information Bureau (PIB) here on Tuesday, he informed that the price inflations measured by the point to point movement in the wholesale price index (WPI) and three consumer price indices (CPIs) have come down from the earlier double-digit to the single-digit level. This show that the prices were on a declining trend and moderated to 8% in September, this year, he said.
The worrying area was the high prices of food, he said. “We can mitigate the effects of high prices by effective distribution system. The government has taken enough steps to sober inflation rate by boosting the supply side. Pulses and edible oils are in short supply in the country and the government has taken steps to make imports of these commodities easier. The food supply side has been strengthened through the public distribution system. On the demand side the Reserve Bank of India has taken steps to curb liquidity by adjusting the repo and reverse repo rates,” the minister said.
The finance minister said that the government will not cap the flow of foreign institutional investments (FIIs) as it was necessary for economic growth. “The government at this stage is not thinking of setting up of a regulator for micro-finance institutions (MFIs) in the country,” he said.
According to Mukherjee the recovery from the global financial crisis has been weak and fragile across the global. India has been able to mitigate the effects of the crisis and return to the growth path by introducing time fiscal and monetary measures. Now is the time for some fiscal consolidation.
“In 2009-10 our growth rate was 7.4% and in the first quarter of 2010-11 it was 8.8%. By the end of the fiscal year 2010-11 we will hopefully achieve 8.5% growth rate as projected,” he said and added that in the near future India was looking at 9% growth.
The recovery from the global financial crisis was fragile around the world and UK and France was still suffering from high sovereign debts he said and cautioned that there was a need for calibrated fiscal consolidation and exit policy.
Regarding the problems of farmers, he said that a committee has been set up under the chairmanship of the expenditure secretary of his ministry to find out the cause of indebtedness of farmers in Punjab