Inflation to be near zero in H2 of this fiscal: Edelweiss

NEW DELHI: Inflation, which is currently over 10 per cent, would come down as low as near zero in the second-half of this fiscal due to falling commodity prices and economic slowdown, broking house Edelweiss CEO Rashesh Shah said on Sunday.

"Prices have fallen with falling commodity prices and economic slowdown. Inflation will be near zero in certain periods of 2009 fiscal," Shah said at a function organised by the Indian Institute of Foreign Trade here.

The Edelweiss CEO also pegged the economic growth to slow down quite drastically at 6-7 per cent during the current fiscal from nine per cent in the previous year.

Shah said the government apart from direct intervention in the market, it should expand fiscal policy measures and go for soft measures to spur growth.

Also, he called for further the income-tax cut to help the industry tide over this economic crisis.

The broking firm had recently come out with its report saying that the possibility of a further strong softening in commodity prices amid a marked global slowdown, domestic inflation can be zero or near zero during second half of 2009 fiscal.

Slowing global industrial production will further weaken base metal prices, especially after the decline in demand from China. Economic slowdown is expected to significantly cut down energy demand, the Edelweiss report had said.



Inflation for the week ended October 25 inched up to 10.72 per cent from 10.68 per cent in the previous week.

With the CRR and repo rate cut, the market has eased off the liquidity crunch, getting credit is easy and cheaper now but there should be further rate-cut shortly, Shah said.

Commenting on the interest rates in the current scenario, he said impact of cut in lending rates work with lag and it will take three to four months to take some effect.