Prime Minister Manmohan Singh exuded confidence that inflation would come down to 5-6% by December adding that the economy is likely to
grow at about 8.5% in the current fiscal. “Price continues to be a matter of deep concern.
The government attaches highest priority to containing inflation so that there is no distress to the common man,” the prime minister said on Monday at a press conference to mark the completion of one year of the UPA-II government.
He said the Centre would closely monitor the situation and, “together with state governments, take all corrective steps to bring down prices and protect the vulnerable sections of society.”
Ratings agency Crisil’s chief economist D K Joshi agreed with the prime minister’s assessment. “Inflation can come down to 6% by March if monsoons are normal and if global commodities prices do not shoot.”
Inflation in food articles has dropped to 16.1% from over 20% in January, but the pace of decline continues to worry policymakers.
The government had relaxed import of essential commodities and imposed ban on export of rice, wheat and pulses, besides restricting sugar exports to check prices, but the impact on prices has been sluggish. The overall inflation has moderated slightly to 9.6% in April from nearly 10% in February amid indication that it was beginning to become more generalised.
The Reserve Bank of India has said that there was evidence that high inflation in food articles was spreading to manufactured products.
Mr Singh blamed the high inflation on international situation, especially high petroleum prices, and drought and floods at home. The UPA-II last month survived cut motions brought against it in Parliament by opposition parties against certain budget proposals that led to hike in prices of fuels and fertilisers. Mr Singh said his government’s priority was to raise investment in social and economic infrastructure and also agriculture.
He added that despite the pressure, the economy was expected to grow 8.5% in this financial year, up from 7.2% and 6.7% in the previous two years. “This is widely regarded as one of the best performances among the larger economies in the world...Our medium target is to achieve a growth rate of 10% per annum. I am convinced that given our savings and investment rate, this is an achievable target,” he said.
Queried on the performance of his government, Mr Singh said that India did not allow global financial crisis to “interrupt” the inclusive growth. “I leave it to you to judge how well we have done on this count.” On the issue of reservation of jobs in the private sector, he said: ”We need to create an atmosphere so that trade and industry participants help us on this issue. We are working hard towards that and we acknowledge it needs to be taken forward fast.”
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