Inflation may ease in 3-4 months: Rangarajan
Inflation will most probably fall in the next three to four months, C Rangarajan, chairman of the Economic Advisory Council to the Prime Minister, said.
By PTI |
BERHAMPUR: Inflation will most probably fall in the next three to four months, C Rangarajan, chairman of the Economic Advisory Council to the Prime Minister, said.
He is pinning his hope on reduction of inflation from around eight per cent to six per cent due to good procurement of wheat and good monsoon.
"If the rains are good, then we can hope to see inflation rate come down further and remain at around 5.5 per cent," he said.
Rangarajan, the former governor of Orissa and well-known economist, was here to address on 'Indian economy in the changing context' in his convocation address at the 16th convocation of Berhampur University.
Attributing the present rise in inflation, which is at a 45-month high of 8.24 per cent, to domestic and international factors, he said the prices, more particularly food prices, have been rising "mainly because of supply side factors".
Drought in Australia, he said, had reduced the availability of wheat considerably. Diversion of corn for the purpose of bio-fuel has reduced the availability of corn for consumption. Besides the food prices, oil prices have also risen sharply, he said.
Domestically, there had been a significant expansion of money supply in recent years, he said. For the past three ears, money supply has been growing at an annual rate exceeding 20 per cent. "This has injected significant liquidity into the system."
Rangarajan, however, said there was a good procurement of wheat and indication of normal monsoon this year would contribute to moderating inflationary expectation. The procurement of wheat, according to him, has touched a record quantity of 20 million tons.
He is pinning his hope on reduction of inflation from around eight per cent to six per cent due to good procurement of wheat and good monsoon.
"If the rains are good, then we can hope to see inflation rate come down further and remain at around 5.5 per cent," he said.
Rangarajan, the former governor of Orissa and well-known economist, was here to address on 'Indian economy in the changing context' in his convocation address at the 16th convocation of Berhampur University.
Attributing the present rise in inflation, which is at a 45-month high of 8.24 per cent, to domestic and international factors, he said the prices, more particularly food prices, have been rising "mainly because of supply side factors".
Drought in Australia, he said, had reduced the availability of wheat considerably. Diversion of corn for the purpose of bio-fuel has reduced the availability of corn for consumption. Besides the food prices, oil prices have also risen sharply, he said.
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Domestically, there had been a significant expansion of money supply in recent years, he said. For the past three ears, money supply has been growing at an annual rate exceeding 20 per cent. "This has injected significant liquidity into the system."
Rangarajan, however, said there was a good procurement of wheat and indication of normal monsoon this year would contribute to moderating inflationary expectation. The procurement of wheat, according to him, has touched a record quantity of 20 million tons.
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