Montek expects inflation to calm down to 8% by March-end

Plan panel Deputy Chairman Montek Singh Ahluwalia said on Thursday ythat inflation will start moderating from December and decline to 8 per cent by the end of current fiscal from near double-digit currently.

"Inflation is going to be brought under control by the end of the year (March 2012). You will see inflation lower than 8 per cent then", Planning Commission deputy chairman Montek Singh Ahluwalia said while addressing the Economic Editors Conference in New Delhi.

Similar views were also expressed by Finance Minister Pranab Mukherjee on Wednesday who had said that inflation would start softening from December and would be around 7 per cent by March 2012.

Earlier in the day, Chairman of the Prime Minister's Economic Advisory Council C Rangarajan also echoed similar views that rate of price rise would moderate in the coming months on the back of good monsoon and increased availability of foodgrain.

Asked whether growth was responsible for rising prices, Ahluwalia replied, "I don't agree that whenever you have (high economic) growth then you have inflation.

"If you try

to stop growth and the economy stagnates, there is no guarantee that inflation will fall. Inflation and growth are two different things".

Ahluwalia also opined that the growth prospects for the country are good in long run and the Commission would target 9 per cent annual economic expansion during the 12th Five Year Plan (2012-17).

The Commission, he said, would work towards pushing up supplies to achieve 9 per cent growth rate in the 12th Plan.

". . .if we succeed in that, we will not generate more inflation," he added.

Inflation has been above the 9 per cent mark since December 2010 and stood at 9.72 per cent in September this year.

He further said that although the government expected the inflation to moderate last year, it did not happen because of the global factors, especially the rising prices of commodities in the international market.

The country's economy expanded by 8.5 per cent last fiscal.

While the government had initially projected GDP to grow by 9 per cent, senior officials including the Finance Minister have in recent months said that growth would be only around 8 per cent on account of the global economic slowdown.

Image: Montek Singh Ahluwalia