Inflation will come down by December end: Montek Singh Ahluwalia

NEW DELHI - Planning Commission Deputy Chairman Montek Singh Ahluwalia on Tuesday said the wholesale price inflation will come down by the end of December 2010.

Ahluwalia, who is also a noted economist, mentioned that the Government is taking several steps to tame down inflation.

“There was inflation in the market and it was problem. The government has taken many steps to control it. We hope that by December, the wholesale price inflation year-on-year will come down to a comfortable level,” said Ahluwalia.

“I already said that it will be six percent or a little higher, but the double-digit that persists right now will come down by December,” he added, while addressing the media persons on the sidelines of a conference on ‘Public Private Partnership in Transmission of Electricity’ here today.

Meanwhile, the Reserve Bank of India (RBI) today hiked its key short-term lending and borrowing rates by 25 basis points each with immediate effect to rein in inflation.

The short-term lending rate or repo-rate stands at 6.25 percent and the borrowing rate (reverse repo) at 5.25 percent.

The RBI has, however, left the Cash Reserve Ratio or the bank rate, which is the amount of cash that banks have to keep with the central bank to maintain prudential norms, unchanged at six percent.

“Inflation is not easy to control immediately. You can take very drastic steps, but those steps may have other damaging affects. So I think we are coming out of a year. Last year was drought here and it is not very easy to control inflation when you have a drought situation,” said Ahluwalia.

“This year is going to be a normal year. Once the food is in the market, I expect to see a much softer position,” he added. (ANI)