Rangarajan calls for tight monetary policy to deal with inflation

February 21st, 2011 - 6:19 pm ICT by ANI  

New Delhi, Feb 21 (ANI): Dr. C. Rangarajan, the chairman of the Prime Minister’s Economic Advisory Council, today said India needed a tight monetary and fiscal policy to deal with high inflation.

Releasing the Review of the Economy 2010-11 here, Rangarajan said: “Monetary and fiscal policies have to be appropriately tight to protect the economy from inflation.

“Monetary policy has an important role to play even in situations where inflation is triggered by supply constraints,’ he added.

He further said that the economy is expected to grow at 8.6 per cent in 2010-11 and 9.0 per cent in 2011-12

India’s industrial sector is likely to grow at 8.1 per cent in the fiscal year to end-March, quickening to 9.2 per cent in the following year, Rangarajan said, adding that exports in the fiscal are seen at 230.3 billion dollars, and would rise to 271.9 billion dollars in the next year.

He also said he saw foreign direct investment at 27.6 billion dollars in 2010-11, rising to 40 billion dollars in 2011-12.

He said he expected headline inflation to ease to seven percent by March.

“The declining trend in food prices particularly that of the vegetables will result in lower food inflation,” he said.

“Manufactured goods inflation has remained low. Considerable care from the policy side has however to be taken to ensure that the manufactured goods inflation remains below five per cent in 2011/12,” he added. (ANI)

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