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Inflation may dip to 5-5.5% in 4 months: Rangarajan

Inflation may dip to 5-5.5% in 4 months: Rangarajan
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First Published: Mon, May 12 2008. 10 15 PM IST
Updated: Mon, May 12 2008. 10 15 PM IST
New Delhi: Inflation is expected to come down to the acceptable level of 5-5.5% after four months due to an anticipated good monsoon and measures taken by the government and Reserve Bank, Prime Minister’s economic advisory council chairman C. Rangarajan said on Monday.
“Inflation is likely to come down to 6% in the next three to four months. Thereafter it can come down to 5-5.5% depending upon the monsoon and other sectors,” he toldreporters on the sidelines of an international tax conference.
Rangarajan is of the view that inflation will come down not only due to monetary measures announced by the Reserve Bank, but due to several other factors as well.
Also, it would be due to the base effect, as inflation was rising at a slower rate at this time last year. Despite all assumptions, it would come down, he said.
“Much will depend upon the monsoon, much will depend on the way how the output behaves...it is possible to go down to 5-5.5%. At present, the expectations are that monsoon will be good,” he said.
On the impact of fiscal measures taken by the government to curb inflation on tax collections, he said, “There will be, of course, some impact of fiscal measures but I think it could be taken care of.”
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First Published: Mon, May 12 2008. 10 15 PM IST