statesman news service
NEW DELHI, 14 JUNE: In line with his recent argument for rate cut, the deputy chairman of the Planning Commission, Mr Montek Singh Ahluwalia, today cited easing inflation as another reason for the apex bank to consider rate cut during its policy review meeting on 17 June.
Expressing happiness over easing of inflation, Mr Ahluwalia said the RBI should take into account improvement in the price situation while deciding on interest rate cut in its mid-quarter policy review due on Monday to boost growth.
“Certainly, 4.7 per cent for the month is better than we had expected. I think it does indicate that there is distinct downturn on inflation which is welcome,” Mr Ahluwalia told reporters.
Asked whether the RBI should consider the easing of inflation in its mid-quarter review next week, he said: “They should certainly consider it because it is very clear that the underline inflationary pressure is softening.”
The industrial output in April showed a very modest growth of 2.3 per cent, down from 3.4 per cent in March.
“If you look at the components of inflation, the food prices have slightly gone up. This is the base level effect I was referring to earlier,” Mr Ahluwalia explained.
“Inflation is softening. The number is lower what it was last year. The good news is that the non-food inflation has really gone down much more than you thought it would. I think the base level effect will wear out in the years ahead,” Mr Ahluwalia added.