Enthused by the prospects of good monsoon, the Planning Commission on Tuesday said the double digits inflation would decline by December, and sounded optimism that economic growth would exceed 8.5 per cent this fiscal.
Plan panel Deputy Chairman Montek Singh Ahluwalia said RBI's monetary steps would be back to normal and monetary actions would not hurt growth. The Reserve Bank had softened drastically policy to offset the impact of global financial crisis last year.
"Inflation in double digits is not acceptable. You will see inflation coming down by this calendar year-end. Good monsoon will help to bring down prices," he said. Inflation, based on movement in wholesale prices is hovering above 10-per cent mark. It was 10.16 per cent in May, and as per the revised estimates, it had exceeded 11 per cent in March.
Inflation figures for June will be out tomorrow and would partly reflect increase in prices of petroleum products. The government had hiked petrol prices by Rs 3.5 a litre while deregulating it, besides raising diesel rates by Rs two a litre, LPG by Rs 35 a cylinder and kerosene by Rs 3 a litre.
Agriculture Minister Sharad Pawar had earlier said there is likely to be a bumper crop production this year with prospects of good rains.
The Meteorological Department had earlier revised forecast and pegged the quantum of rains for the country for June-September period at 102 per cent of the Long Period Average (LPA).
Ahuluwalia said, "I think we would end the fiscal with a GDP growth of 8.5 per cent with upward bias." On IMF revision of growth forecast for Indian economy to 9.5 per cent this calendar year from earlier 8.8 per cent, he said, "For the last five years they have been pitching our growth less than what it was. They are over optimistic."
"We should encourage them to have positive views. IMF talk about calendar year. Our estimate of 8.5 per cent growth is for the fiscal year. They have been quite bullish. They think we can do it."
When asked about decline in industrial growth numbers to 11.5 per cent in May from 16.52 per cent in the previous month, Ahluwalia said, "I told you that it will come down because of base effect. I think industrial growth would be in double digits this fiscal."
He said the RBI monetary policy will be back to normal. "RBI monetary policy is going back to normal. As of now, I don't think anything is wrong with the RBI policy. I think RBI should make whatever adjustments are necessary. Monetary policy is not a constraint on growth right now," he added.
