New Delhi: There will be no respite from rising prices in the immediate run, with PM’s Economic Advisory Council (PMEAC) suggesting that inflation may touch 13% while the GDP growth rate is expected to slide to 7.7% from 9% recorded last year.
“For some more time inflation can increase. It could touch 13%. But by December, it will start declining and is likely to moderate to 8-9% by March 2009”, said outgoing chairman of the PMEAC C Rangarajan while releasing the Economic Outlook for 2008-09.
Approving the Reserve Bank of India’s tight monetary policy to contain inflation, which has touched the 13-year high mark of 12%, Rangajaran said: “It (inflation) could be brought down to 8-9% by March 2009 through co-ordinated policy action.”
As regards RBI monetary policy, Rangarajan, who is also a former RBI Governor, stated: “The tight monetary stance needs to be maintained till the pace of inflation comes down.”
“There is a slowdown in agriculture, industry and services and the global environment is not very conducive to growth. This will affect Indian economy as well,” he said while justifying the 7.7% economic growth projection for 2008-09.
The agriculture production is likely to grow at a lower pace of 2% in the current year as against the 4.5% in last fiscal, he said adding industrial output is expected to decelerate to 7.5% from 8.5% and services to 9.6% against 10.8% in 2007-08.