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Inflation expected to fall in 3-months, says Rangarajan

— PHOTO: PAUL NORONHA

OPTIMISTIC: C. Rangarajan (left), Chairman, Economic Advisory Council to Prime Minister with C. B. Bhave, Chairman, SEBI, at a conference in Mumbai on Saturday.

MUMBAI: Hoping that inflation could slide to six per cent in the next three months, Prime Minister’s Economic Advisory Council Chairman C. Rangarajan said on Saturday that 8-8.5 per cent economic growth is achievable.

“Inflation has reached uncomfortable levels and several actions have been taken on the monetary and fiscal sides. I think in the next three months it (inflation) could come down to 6 per cent,” Dr. Rangarajan told reporters on the sidelines of an SME conference here. The wholesale price index-based inflation has risen to 42-month high of 7.57 per cent for the week ended April 19.

Dr. Rangarajan said while the impact of the fiscal and monetary measures taken to contain inflation would take some time to show results, a good procurement and reasonably good monsoon expectation would also contribute towards easing inflation. “I do think that apart from the impact of fiscal and monetary measures, procurement has been good and the monsoons are expected to be reasonably good,” Dr. Rangarajan said, adding that this too would help in moderating inflation. He said the base effect on food price index has also caused the exaggerated inflation figure.

On the impact of global economic downturn, he said, despite the slump India’s economy is expected to grow at 8-8.5 per cent.

However, disturbances in domestic and international markets may have slight effect on growth.

Earlier in his speech at the conference, Dr. Rangarajan said credit flow from the banking sector to small and medium enterprises was still inadequate and wanted banks to enhance credit disbursals to SMEs besides launching state-level venture capital funds for small-scale units.

Dr. Rangarajan also urged the market regulator SEBI to swiftly set up a separate exchange for SMEs. — PTI

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