There’s scope for more monetary measures: key PM aide

November 11th, 2008 - 2:31 pm ICT by IANS  

New Delhi, Nov 11 (IANS) There is still some scope for the Reserve Bank of India (RBI) to take monetary measures to further improve the liquidity situation, a key economic aide to Prime Minister Manmohan Singh said here Tuesday.”I personally think there would be some scope for further rate cuts,” Suresh Tendulkar, Chairman of the Prime Minister’s Economic Advisory Council (EAC), told reporters on the sidelines of a function.

Tendulkar, a professor at the Delhi School of Economics (DSE), also said inflationary trends would moderate significantly by early next year.

“I expect the wholesale price inflation to fall to single digit by early next year,” said Tendulkar, whose EAC has also forecast inflation slipping down to 8 to 9 percent by the end of the current fiscal.

India’s annual rate of inflation rose to 10.72 percent for the week ended Oct 25 from 10.68 percent the week before.

Responding to a query on China’s stimulus package, Tendulkar said the government was closely monitoring the situation and was constantly in touch with the industry to respond to any situations swiftly.

“The prime minister has given assurances to the industry of all possible help,” he said.

China, Asia’s largest economy followed by Japan and India, last week announced a $586-billion economic stimulus package to counter any adverse impact of the global slowdown on the country’s economy, which logged a 9 percent growth in the third quarter of the current fiscal, the slowest in five years.

Prime Minister Manmohan Singh, who met industry representatives Nov 2 here to discuss the financial crisis, himself heads an apex group to coordinate the government’s response to concerns raised by India Inc on the global financial meltdown and its impact on the domestic economy.

Finance Minister P. Chidambaram, Commerce Minister Kamal Nath, Planning Commission Deputy Chairman Montek Singh Ahluwalia and the RBI Governor D. Subbarao are other members of the group.

The current bout of financial crisis coupled with high inflation has left the Indian economy on slow track, with EAC forecasting around 7 percent growth in the current fiscal as against the average 9 percent the economy registered in the past four years.

“We will have a relook at our projections in January. My gut feeling is it could be 7 percent, one or two percentage points here and there,” Tendulkar had told reporters here Saturday on the sidelines of a Planning Commission review meeting on the country’s macro-economic situation.

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