India sees inflation at 6.4-6.6 pct after 8 weeks

Enlarge Photo A vendor arranges vegetables at a wholesale market in Siliguri February 28, 2008. REUTERS/Rupak De...

Thu, May 8 04:28 PM

NEW DELHI (Reuters) - India expects inflation rate to decline by a percentage point to 6.4-6.6 percent in 6-8 weeks from a three-year high in mid April as fiscal and monetary steps kicks in, Junior Industry Minister Ashwani Kumar said on Thursday.

Kumar also said a series of "calibrated steps are in the offing," but government would ensure that anti-inflationary steps do not choke growth in Asia's third largest economy.

"Our endeavour is to maintain price stability consistent with growth. We need to grow at 8 percent," Kumar, whose ministry releases inflation data every week, told a news conference.

India's headline inflation rate has been rising steadily this year and hit a three-year high of 7.57 percent in mid April on costlier food, metals and fuels.

The federal government has, in the recent months, cut import duties on edible oils, banned export of rice and cement and asked steel firms to roll back price rises to fight inflation.

The central bank maintained a tight monetary stance, and last month it raised the cash reserve ratio by 25 basis points to 8.25 percent, its highest level in seven years, to drain extra cash.

"I think the cumulative effect (of fiscal and monetary steps on wholesale price index) will be in the range of about one percent. It could come down to 6.4 or 6.5 or 6.6 percent in the coming eight weeks," Kumar said.

STEEL, CEMENT UNDER SCANNER

Reeling out latest price data of key commodities, Kumar said prices of most commodities were showing a declining trend.

While steel firms on Wednesday assured government of cutting prices, Kumar said the government has also got assurance from cement firms on price cuts.

"That is why we are engaging with the industry. We are not controlling prices by fiat," he said.

The industry ministry has requested finance ministry to offer tax relief to cement firms hit by rising input costs, he said.

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