Chief Statistician T C A Anant expects headline inflation to fall below eight per cent by August-September if the country receives a normal monsoon.
Anant’s remarks come days after the government raised petrol prices by Rs 5 a litre and is expected to increase diesel and cooking gas rates as well.
“Headline inflation will fall below the eight- per-cent mark by August-September if the country receives a normal monsoon,” the chief statistician told reporters on the sidelines of an event organised by industry body Ficci. This implied that he expects food inflation to fall following a normal monsoon and its resultant impact on other industries as well.
Planning Commission member Abhijit Sen also said food inflation would fall to around seven per cent by the end of June from the current level of 7.47 per cent in the first week of May. Thereafter, he told reporters the numbers would depend on the monsoon.
Headline inflation in the country has been above the eight-per-cent mark since January 2010. In April, the overall inflation stood at 8.66 per cent, as against over 9 per cent in March. In its annual policy, the Reserve Bank of India had said that while inflationary pressure from food items had been declining, concerns remained about high global commodity prices.
Anant also said India’s economic growth was expected to be around 8.5 per cent in the current financial year, down from earlier expectations of nine per cent due to high global crude oil prices.
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This way, he endorsed the view, already articulated by Finance Minister Pranab Mukherjee and Chief Economic Advisor Kaushik Basu.
Both Mukherjee and Basu had earlier said India’s GDP growth in 2011-12 would be less than the projected 9 nine per cent because of high global crude prices, which has also pushed up domestic prices.
“The oil situation is a matter of worry and it is likely that oil prices internationally will harden significantly... Crude is also a major input. So, it may be a factor which will dampen some of our growth expectations,” Anant said. In its pre-Budget economic survey, the government had projected that the country’s GDP would grow by nine per cent this financial year.
However, the Reserve Bank of India (RBI), in its monetary policy for 2011-12 released earlier this month, pegged GDP growth at eight per cent and said inflationary pressure would affect growth. The finance minister and other senior figures in the government also recently said growth would be below nine per cent.
Anant said the current political turmoil in parts of West Asia and North Africa, along with the recent tsunami and earthquake and subsequent radiation leakage that hit Japan, could affect oil prices.
“The West Asia situation is an area of concern. It is likely that the fall-out of the events in Japan may temporarily raise demand for fossil fuel like oil and gas while they review their nuclear dependence... I suspect these (factors) will contribute to a certain measure of hardening of crude prices,” Anant said.
Global crude prices are currently above $100 a barrel on account of events in West Asia and North Africa, particularly the civil war in Libya, a major oil exporter and OPEC member.