Chief economic advisor to the Union ministry of finance, Kaushik Basu, on Thursday said the food inflation rate, which has dipped to single digit at 9.52%, will drop further and touch the 7% mark this fiscal.
Chief economic advisor to the Union ministry of finance, Kaushik Basu, on Thursday said the food inflation rate, which has dipped to single digit at 9.52%, will drop further and touch the 7% mark this fiscal.
Basu said food inflation is seasonal and, going by the direction of food price index (FPI), the inflation rate would be around 7% this fiscal.
“The inflation trend of November-December (2010) was considered temporary. But the rising crude oil prices are a matter of concern for the country. We are keeping a close watch on the situation. It is mainly driven by the ongoing political situation in West Asia,” he said.
Basu was speaking to reporters on the sidelines of the convocation ceremony of the National Institute of Bank Management (NIBM) here on Thursday,
India’s food inflation rate dipped to single digit at 9.52% for the week ended February 26 from 10.39% for the previous week as the prices of vegetables and onions, among other things, fell further.
Basu said the GDP estimate of 8.6% would remain intact.
In his speech at the convocation ceremony, Basu said the economic growth of the country depends on various variables and there is no certain formula to it.
“The GDP of 8.6% is standard after the global slowdown. Now, India is seen as the engine of global growth, but along with it comes responsibility. One of the major reasons for the growth rate picking up is increase in the national savings rate. Starting from 2003, the savings rate witnessed a steady rise and was able to cross 30% of the total national income,” he said.
Reserve Bank of India (RBI) governor, D Subbarao, said the investment in infrastructure was estimated to be in the tune of trillion dollars in the next 5-year Plan and much of the burden falls on banks.
“From 4-5%, the GDP share for infrastructure in the coming 5-year Plan will be 12-13%. Banks in the country will have to be more innovative to bear this additional burden,” he said.
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