Interest rates may go up by year-end: Rangarajan

HYDERABAD: The economy is showing the signs of recovery and interest rates are set to rise by the end of the current fiscal, said C Rangarajan, chairman of the Prime Minister���s Economic Advisory Council.

���The improvement in credit off-take will push up demand for credit, as the economy recovers. Interest rates may harden a little bit by end of the fiscal,��� he said at a conference on global economic meltdown on Thursday.

He reckoned that the accommodative monetary policy cannot continue indefinitely, but cautioned against premature withdrawal. ���RBI particularly has to guard against inflation,��� he said.

The inflation rate measured by the wholesale price index edged back to the positive territory after 13-week at 0.12%, driven by higher prices of essential items.

On Wednesday, RBI governor D Subba Rao had said the central bank will look at a host of factors such as the WPI-based inflation, consumer price index-based inflation, components within inflation, while unwinding the soft monetary policy
Mr Rangarajan also said the stimulus package and fiscal measures will be sufficient till the end of the current fiscal.

According to him, the capital flows were also improving. ���Both FDI and FIIs inflows will be larger this year. The total addition this year will be $20 billion,��� he said.

According to divestment was a must to bolster revenues the right time would be when the stock markets doing well.