The Hindu Business Line : `Rise in inflation not to hurt growth'

As inflation surged to over a year high of 5.44 per cent for the week ended June 17, the Finance Ministry on Friday maintained that the rise in inflation and fuel prices would not hurt economic growth during the current fiscal.

A senior Finance Ministry official expressed confidence that the gross domestic product (GDP) would grow over 8 per cent in the current fiscal even while asserting that the Government was prepared to take fresh measures to tame inflation.

The Government data released on Friday showed that inflation surged to over a year high of 5.44 per cent for the week ended June 17, from a level of 5.24 per cent recorded a week earlier.

"We are constantly watching the situation. We will take necessary steps to ensure that growth is not affected. The stage hasn't come to say that we will miss our targets," a senior Finance Ministry official, who did not wish to be identified, said here.

Stating that the Government has taken serious note of the concern expressed by the Congress party on rising prices of essential commodities, the official said that inflation would remain under constant review.

"Inflation is certainly a cause for concern and has risen because of constraints in supplies. We hope the measures taken already would moderate prices. Inflation is likely to come down in the next 2-3 weeks," the official said.

On the move of the US Federal Reserve to raise interest rates a 17th straight time by 25 basis points, the Finance Ministry official said that it was for the Reserve Bank of India (RBI) to take into account the Fed rate hike and take appropriate steps.

As regards agriculture, the official said that the target for agricultural growth remains at 4 per cent. "Agricultural growth is expected to be handsome with normal monsoon and cheaper agricultural credit," the official said.

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