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Sunday, Apr 13, 2008
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Inflationary expectations contained: Chidambaram

Washington: While expressing concern over rising global commodity prices, Finance Minister P. Chidambaram on Saturday said India was able to contain inflationary expectations though headline inflation had gone above the tolerance level of five per cent.

“While inflationary expectations remain contained, headline inflation rose above the projected tolerance level of five per cent recently, reflecting higher food, fuel and other commodity prices, particularly metals,” Mr. Chidambaram said at the 7th meeting of the International Monetary and Financial Committee. According to the latest government estimates, inflation soared to 7.41 per cent, the highest in the past 40 months.

The Finance Minister said emerging markets, including India, could find it difficult to sustain the economic growth if apprehensions about the U.S. recession turn out to be correct.

“Another worrisome development is the emergence of global inflationary pressures. While growth expectations have dampened, inflationary expectations have not.”

Though the overall external trade and current account situation was evolving as per expectations, strong “capital inflows and their volatility continue to pose significant challenges to macro-economic management.”

Mr. Chidambaram also told the international community that India remained committed to “economic reforms and conduct macro-economic policy to enable continuation of the growth momentum with stability.” — PTI

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