FM says fall in inflation outcome of fiscal, monetary policies

New Delhi, Dec 14 (PTI) Amid expectations that Resrve
Bank of India would pause rate hike spree in its policy review
on Thursday, the Indian Government Tuesday attributed the
11-month low inflation of 7.48 per cent in November to prudent
fiscal, monetary policies.
However, it also stressed upon the need for not straying
off the course.
"These inflation figures show that we have done well in
terms of our monetary and fiscal policies. It is, however,
important for us to stay on the planned path of policy," said
Indian Finance Minister Pranab Mukherjee.
He added that only items which showed substantial price
rise include safflower, coir fibre and copra, which form small
part of total basket of commodities and hence have minimal
impact on overall inflation.
The Reserve Bank is widely expected to hold on to the
current key policy rates in its December 16 mid-quarterly
monetary review, after having hiked them 6 times so far this
year in a bid to tame inflation.
"As for the RBI mid-quarterly review on December 16, we
do not think that it will take any action. The inflation has
moderated and that has helped," Crisil chief economist D K
Joshi said.
Axis Bank Senior Vice President Saugata Bhattacharya
said concurred with the view.
The Finance Minister said food inflation was down to
6.11 per cent in November, against 9.97 per cent in the
previous month.
He expects that inflation will fall to 6 per cent by the
end of this fiscal.
"I am delighted with the latest headline inflation
figures. These numbers take us another step towards our
forecast of 6 per cent inflation by March 2011. I am very
happy that there has been a sharp decline in inflation," said
Mukherjee.
RBI meanwhile has pegged inflation at 5.5 per cent for
March-end. RBI Governor D Subbarao recently said the central
bank would revisit the numbers at its January quarterly
review.
The finance minister said after quite some time food
inflation has become "very moderate".
Inflation was 8.58 per cent in October. It was 4.50 per
cent in November 2009.
This is the fourth consecutive month when the overall
inflation has been in the single digit.
It had remained over 10 per cent for six months till
July.