The Government and RBI expect inflation to come down to around 7 per cent by the end of the current financial year. “I say this with some amount of caution though,” said Mr Kaushik Basu, Chief Economic Adviser, Ministry of Finance.
Addressing the audience at a symposium on ‘Global uncertainty and its impact on India's exports,' organised here by the Federation of Indian Export Organisations today, he said food inflation is likely to start easing from the second week of December.
Inflation is an intricate problem. Taming it by controlling the demand side will certainly have a dampening effect on the economy, but it will only be a short-term turmoil. It is done in the interest of the country's growth in the long-run. Even this compared with other developing countries, and what was in India in 1970s and 90s when inflation remained in two digits for 2 years in a row, this time around it was over 10 per cent for only four months last year, he said.
A short-termphenomenon
Though the current global economic scenario is not so rosy, things will settle down. He said the Government hopes it's only a short-term phenomenon, like earthquake — shift in the tectonic plates of the economy. After the plates settle down, new lands will emerge. So far, India is doing better. If we take Q2 of the G-20 countries, only Australia performed better than Q1. Only a few countries such as India and Indonesia managed to remain flat, but almost all other countries performed worse. “Unless we really mess up, unless we do things that are gravely wrong, India will emerge successful,” Mr Basu said.
Mr H.A.C. Prasad, Senior Economic Adviser to the Union Finance Ministry, said the fundamentals of the Indian economy are strong and the latest data for some other key variables are also robust and they do not indicate any major slowdown.