Inflation would ease further, says Economic Affairs Secy

| | Updated on: Dec 15, 2011

The government today expressed hope that price situation would ease further and said moderation in food inflation will give some space to RBI to address the worrying level of economic growth.

“Inflation rate is expected to begin falling from December and then continue downward trend to 7 per cent by March (2012). It is expected to moderate further in the first half of 2012—13,” Department of Economic Affairs Secretary R Gopalan said at the Delhi Economic Conclave here.

“Moderating inflation rate is likely to impact expectations favourably. This will create some room for monetary policy to address growth rate in the short run,” Gopalan added.

His comments come on a day when food inflation fell to a near four—year low of 4.35 per cent.

Headline inflation in November stood at 9.11 per cent, the lowest in one year.

The Reserve Bank has hiked interest rates 13 times since March 2010 to tame demand and curb the headline inflation, which remained above 9 per cent level in the recent months.

The economy in the second quarter grew at a rate of 6.9 per cent, the lowest in over two years. Industrial production entered the negative zone in October and contracted by 5.1 per cent.

Gopalan said the government is looking at various options to meet the disinvestment target of Rs 40,000 crore by stake sale in public sector enterprises.

“There are a number of ways by which we are trying to meet shortfall (in disinvestment target),” he said.

Gopalan said that various options are at various stages of consideration. “It is possible to get that money this year by the kind of means we are pursuing. From my side I am confident that we will get that money,” he added.

The government has managed to raise only Rs 1,145 crore from Power Finance Corporation’s follow—on public offer (FPO) this fiscal so far.

In its Mid—Year Analysis, 2011—12, tabled in Parliament last week, the government said that meeting the disinvestment target is a “stiff task“.

The government has not come out with any public offer to sell its stake in PSUs, except PFC, this fiscal in the backdrop of volatility in the capital market due to global and domestic factors. PTI DP RSN PPB MR 12151811

Published on December 15, 2011

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