Banking on monsoon, PM expects inflation to drop by December

New Delhi, July 24 (PTI) Under attack for surging prices
particularly of food items, the Indian government Saturday
said it expects good rains to help halve inflation to six per
cent by December.
"We expect to see the rate of inflation in wholesale
prices to come down to around 6 per cent by December," Prime
Minister Manmohan Singh said in his opening remarks at the
meeting of the National Development Council, being attended by
several central ministers and most of the chief ministers.
His remarks come ahead of the monsoon session of
Parliament, which is expected to be stormy over issues
including price rise.
He said the government has taken a number of steps to
curb price rise. "With normal monsoon, which is the
expectation at present, the rate of inflation in food prices
will abate in the second half of the year," Singh said.
Monsoon accounts for around 80 per cent of rains India
receives and nearly 60 per cent of the cultivated land is
rain-fed. Two years of poor rains had led to an upward spiral
in food prices, the effect of which spread to manufactured
goods.
Food inflation is above 12 per cent and overall rate of
price rise is above 10 per cent, giving the Opposition parties
enough ammunition to corner the government in the Parliament
session beginning Monday.
On the pace of economic growth, he said the country's
gross domestic product is expected to expand by 8.1 per cent
during the 11th Five Year Plan period (2007-12) against the
targeted nine per cent.
"This is lower than the target of nine per cent, but
still the highest achieved in any plan period," he said.
India's economic growth slowed down during 2008-09 to 6.7
per cent from over nine per cent since 2005-06 due to
the global financial crisis. However, stimulus packages to
boost demand pushed it up to 7.4 per cent last fiscal.
Economic growth is expected to be 8.5 per cent this fiscal.
On tax reforms, the Prime Minister appealed to chief
ministers to extend their support to the Goods and Services
Tax (GST), which the government wants to implement from the
next fiscal.
Since the introduction of GST would require
constitutional amendments and ratification by at least half of
state assemblies, the support of chief ministers, particularly
NDA-ruled states is crucial for radical reforms.
The meeting of the NDC, the country's highest policy
making body, was called to review the progress of the 11th
Plan and set right anomalies, if any. PTI