The Planning Commission Deputy Chairman Montek Singh Ahluwalia accepted that the planning commission went wrong whilst projecting moderation in inflation which has been hovering around two digit marks from almost a year.
Ahluwalia said, “It is true that we were hoping that this (moderation in inflation) will happen earlier, to that extent our credibility becomes a question. You should recognize that short-term forecast is subject to error”. However, he asserted inflation would moderate to 7-7.5% by March, 2012.
The headline inflation measured by Wholesale Price Index (WPI), for the month of October stood at 9.73% which is marginally up by 9.72% in September. On the other hand, country’s weekly food inflation stood at 10.63% for week ended November 5.
The inflation has remained stubbornly high in spite of the repeated assurance by several government functionaries that it would moderate. The Reserve Bank of India (RBI), on many occasions has said that inflation would start moderating from December.
Replying to criticism of India Inc that there was a policy paralysis in the government, Ahluwalia said “Industry has been a lot more focused on decisions that are holding up infrastructure projects and not the (financial) reforms. The government is keen to push (reforms) ahead but needs to develop political consensus and if the measures like GST, DTC and other reforms are delayed, that does not mean that they would not happen”.
Asia’s third largest economy’s inflation has remained above 9% for eleven consecutive months which has added to the woes of Inc’s growth. Although the inflation failed to moderate as per estimates, however, the planning commission maintains a positive stance that one of the nation’s growth stymies will reduce down by March 2012.
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