There is no need for caps or controls on foreign institutional investments as there are no indications that the inflows are large, said, Dr C. Rangarajan, Chairman, Prime Minister's Economic Advisory Council, on the sidelines of launching Indian Bank e-banking lounge.

Inflation outlook

Talking about inflation, he said that so long as the inflation rate remains at a high level, the monetary policy must continue to remain tight. The monetary policy can move from the current stance only when the inflation rate has shown strong decline.

It is expected that the inflation numbers will show some decline for the month of March.

“Certainly by April-May we should be closer to 7 per cent,” he said. The food price inflation is coming down. The weekly data that are available do indicate that the food price inflation is coming down.

The Chairman said the persistent food price inflation has also extended inflation to the manufacturing side, which is why the overall inflation has not been coming down as fast as expected.

Dr Rangarajan, said, the food price inflation should further come down as the wheat crop is estimated to be good. When the wheat crop comes to the market, foodgrain prices are expected to fall.

He said, “We thought the Index of Industrial Production would pick up”. It is showing some improvements over the previous months but in some ways the growth of industrial production comes on top of fairly steep increase in the previous year, said Dr Rangarajan.

“For the year as a whole perhaps the industrial production will be about 8 per cent,” he said. A turnaround is expected in IIP in the next fiscal.

Petro prices

There will be some policy decisions relating to the petroleum products during the year. The timing of the decision will begin when the inflation rate falls decisively, he said.

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