Inflation to stabilise to 5.5% by March: PM Manmohan Singh

With the rate of price rise moderating in recent months, Prime Minister Manmohan Singh today exuded confidence that inflation will stabilise at around 5.5% by March next year and the economic growth will improve to 8.5%.

"Inflation remains a cause for serious concern in our country... We expect this downward trend to continue and the rate of inflation to stabilise around 5.5% by next March," he said while addressing the 83rd plenary session of the Congress Party.

Inflation, which has become a politically sensitive issue, declined to 7.48% in November from 8.58% in the previous month.

It was in double digits for several months till July.

Food inflation, however, rose to 9.46% for the week ended December 4 from 8.69% in the previous week.

Pointing out that the government had taken several steps to check rising prices, the prime minister said, "We will continue to do so... In recent days, the rate of inflation has come down to 7.5%."

Referring to economic growth, Singh said that despite the global economic crisis, the country has been able to maintain a healthy growth rate.

"In the last two quarters, our growth rate has been 8.9% and we expect that for the entire year, it will be around 8.55%. We also expect that from the next year onward, we will be able to grow at a rate between 9 and 10%."

The Indian economy was expanding at over 9% before the global financial meltdown dragged down the growth rate to 6.7% in 2008-09. Thereafter, spurred by the stimulus provided by the government and the Reserve Bank, the growth rate improved to 7.4% during 2009-10.

As regards the current fiscal, the economy recorded a growth rate of 8.9% in the first half. According to the mid-year analysis prepared by the finance ministry, growth for the whole year could be 8.75%, with a variation of about 0.35% on either side.