A day ahead of quarterly review of monetary policy by RBI, Chief Statistician T.C.A. Anant said steps by the central bank and good farm output is likely to bring inflation down to around 6 per cent by the end of the year.
“I think six per cent inflation is feasible by year-end.
I expect to see a substantial softening of the rate of inflation by December,” Mr. Anant told reporters on the sidelines of Exim Bank’s award function here.
He said that a variety of reasons, including an increase in agricultural productivity on account of good monsoon and actions by the Reserve Bank of India (RBI) would lead to a slide in the inflation.
“All the measures, which RBI has been taking in this regard (to bring down inflation) and may take in the future, would also have shown up by that time,” he said.
Last week, Prime Minister Manmohan Singh had exuded confidence that inflation would be down to 5-6 per cent by December-end.
RBI is expected to up short-term lending and borrowing (repo and reverse repo) by 25 basis points tomorrow at its policy review to check inflation.
The central bank had earlier this month already hiked these rates by 25 basis points to ease the inflationary pressure.
Mr. Anant also said by December there would be significant arrival of crops in the market that would make inflation fall.
“We should see significant improvement in agricutural production,” he said.
Mr. Anant also said proper management of government finances would also lead to a fall in inflation.
“I feel (fiscal) deficit target to be well under control. I expect that a number of government initiatives taken in recent times should show affect by third quarter on its ability to manage the deficit target,” he said.
The government expects to bring down fiscal deficit to 5.5 per cent of GDP this fiscal against over 6.5 per cent during 2009-10.
Food inflation in the country was 12.47 per cent for the week ended July 10, while the overall inflation was 10.55 per cent for June.
