Extremely difficult to predict inflation, says Pranab

Finance Minister Pranab Mukherjee today said it is "extremely difficult" to predict level of inflation in the wake of uncertainties in West Asia but the government is making efforts to bring it down to "reasonable level". 

However, Mukherjee was more optimistic on growth saying it would be in the range of 9 per cent in 2011-12 despite a likely slowdown in foreign inflows.

In his reply to a debate on the Finance Bill 2011, the Finance Minister said for growth, he was betting on robust domestic savings and rate of investment which is in the range of 36-37 per cent. 

The House later returned the related Bills signalling completion of the three-stage budgetary exercise for 2011-12. This includes Parliamentary approval for appropriation of over Rs 46 lakh crore from the Consolidated Fund of India.

Responding to a pointed question of Chandan Mitra (BJP) as to when exactly the inflation would come down, Mukherjee said, "It will be extremely difficult to indicate as seen from the behaviour of last six months..."

He said while the three indices relating to consumer prices show inflation in single digit, the level remains too high to be acceptable.

Food inflation crept back into double digit at 10.05 per cent for the week ended March 12, while the general inflation in February was 8.31 per cent. On the monetary front, the Reserve Bank has been following a tight monetary policy and has raised its lending rates to banks eight times in the last one year.

Describing crude oil as "really slippery", marked by very high fluctuations, the Minister said the current political crisis in West Asia will have implications for the Indian economy because two-thirds of country's oil imports come from that region.

But, he exuded confidence that the government would be able to "manage the affairs without being jolted from external shocks." As regards inflation, he said, "...It will be possible for us to maintain the inflation at a reasonable level, moderate level." 

Mukherjee said his reference to the situation in West Asia and the possible impact of Japan earthquake on global economy was not meant to indicate that the prices would go up. 

"When I refer to crisis in Japan... (it is) not to find a cover or excuse that prices will go up. Today my primary concern is availability (of crude oil)... If the situation remains unstable in West Asia, it is quite natural for anyone to express concern and hope for stability in the region", he said.