New Delhi: Planning Commission deputy chairman Montek Singh Ahluwalia today said inflation would ease in next four months due to various measures taken by the government, even as he conceded that petroleum price hike is expected to add 0.5% to the rate of price rise.
Ahluwalia also said that economy is on the way to achieve 8% target, and this would not be affected by increase in prices of petrol, diesel and LPG.
“It (inflation) would depend on world prices, but it would be lower than the current level four months down... The direct effect of what has just been done (petroleum price hike) will probably be about 0.5%. But if the other measures we have taken, that start bringing down inflation, I hope it will not go to double digit,” he told reporters here.
He said the anti-inflationary measures that the government has taken will certainly bring inflation under control. “I believe it (inflation) would be lower than the current level. It certainly would be lower than what it could have been otherwise. Only thing is we will have to be patient.”
Ahluwalia said he does not agree with the view that by not increasing fuel prices, inflation could be controlled. “You might have kept fuel prices a little lower, but by financing this through oil bonds, other liquidity injections would have created a bigger inflation four months down.”
He said the move to increase petroleum prices would not derail GDP growth. “8% growth is on the target so far. Though it is lower than last year, it is a fantastic growth rate. 8% will not be affected,” he said.
Farm sector growth rate, which stood at 4.5% during 2007-08, will not be affected by these measures, Ahluwalia added.