Interest rate unlikely to ease soon: Pronab Sen
Asked how long it would take the non-food inflation to ease to 6.5 per cent, Sen said "between three to four months".
By PTI | Updated:
KOLKATA: The high interest rate regime is likely to continue in near term as long as non-food item inflation eases to 6.5 per cent, Principal Advisor in the Planning Commission, Pronab Sen, said on Thursday.
"Though food inflation is in negative zone, but manufacturing item inflation is at 7.8 per cent. I do not think they ( RBI) will reduce rate unless this inflation comes down to at least 6.5 per cent," Sen said at an interactive session with the Bharat Chamber of Commerce here.
Asked how long it would take the non-food inflation to ease to 6.5 per cent, Sen said "between three to four months". According to him, food inflation which is in deflation of over three per cent will not continue for long and by March-April it would be to 7-8 per cent. "We are in negative zone on food due to very high inflation in food articles last year," Sen said.
Regretting that the government was not addressing structural issues affecting inflation in agriculture, Sen said inflation was within permissible limit despite food inflation of 7-8 per cent last few years due to low inflation in manufacturing articles. But drought shot up food inflation.
Calling for proper logistics for agricultural growth, he said, "it is chicken and egg problem. Production side problem cannot be solved unless there is proper logistics mechanism."
Asked whether the Planning Commission has addressed the issue, Sen said, "we have flagged the issue in the 12th plan concept paper." Sen advocates change of APMC Act by states for revamp in agriculture.
On land acquisition, the Planning Commission principal advisor recommends for a sensible method for pricing of land.
"Land is genuinely a scarce commodity, specially in West Bengal which has the highest population density. But we can link to some indicator like employment for per unit of land allowed for acquisition," Sen said.
"Though food inflation is in negative zone, but manufacturing item inflation is at 7.8 per cent. I do not think they ( RBI) will reduce rate unless this inflation comes down to at least 6.5 per cent," Sen said at an interactive session with the Bharat Chamber of Commerce here.
Asked how long it would take the non-food inflation to ease to 6.5 per cent, Sen said "between three to four months". According to him, food inflation which is in deflation of over three per cent will not continue for long and by March-April it would be to 7-8 per cent. "We are in negative zone on food due to very high inflation in food articles last year," Sen said.
Regretting that the government was not addressing structural issues affecting inflation in agriculture, Sen said inflation was within permissible limit despite food inflation of 7-8 per cent last few years due to low inflation in manufacturing articles. But drought shot up food inflation.
Calling for proper logistics for agricultural growth, he said, "it is chicken and egg problem. Production side problem cannot be solved unless there is proper logistics mechanism."
Asked whether the Planning Commission has addressed the issue, Sen said, "we have flagged the issue in the 12th plan concept paper." Sen advocates change of APMC Act by states for revamp in agriculture.
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On land acquisition, the Planning Commission principal advisor recommends for a sensible method for pricing of land.
"Land is genuinely a scarce commodity, specially in West Bengal which has the highest population density. But we can link to some indicator like employment for per unit of land allowed for acquisition," Sen said.
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