Inflation still a concern, needs policy action: Kaushik Basu

Inflation still a concern, needs policy action: Kaushik Basu

New Delhi: The government today said inflation continues to be a matter of concern and needs policy action to contain it, although prices are expected to start falling slowly over the next two to three months.

“I believe inflation is still high ... still of concern. We do need policies for that (containing it), but probably inflation has peaked," chief economic advisor Kaushik Basu told reporters on the sidelines of an Assocham function.

Basu expects inflation, which touched 9.9% in March, to start falling steeply after a few months.

“It (inflation) is going to be on a downward trajectory slowly for 2-3 months and then rapidly thereafter," he added.

While economists expect the RBI to tighten money supply to cool down surging prices in its 20 April policy review, Basu said there are other intervention options as well that the government can take, apart from monetary action by the RBI.

“You are probably going to see little bit of different kinds of interventions. I don’t know whether it’s going to be monetary intervention... there are things that we are planning in terms of pulses, food release, sugar," he said.

“RBI has been extremely judicious," he added.

Led by rising food prices, overall inflation had gone up to a 17-month high in March.

“For a long time, we thought that food never crossed 20% (inflation), but then we discovered that in the end of November, it had actually crossed 20%," Basu said.

He said core inflation has come down down, although it continues to still be high. “Core inflation by our calculation is 5.2% in March. It was 5.5% in February."