Food inflation will come down to 7%: Basu

The downward trend in food inflation which has attained single digit now, would continue and could touch 7% shortly, Chief Economic Advisor Kaushik Basu said here today.

"Inflation has come down substantially and I expect it to fall quickly in another two months," he told reporters noting that food inflation figure which was earlier above 10%, had been reduced to 9.52% now.

"It is not unexpected. What we had anticipated is happening," Basu said adding that the November-December (2010) inflation movement was considered temporary.

By the end of fiscal, the inflation figure could be pegged at 7%, he said.

Basu was here to attend the convocation ceremony at National Institute of Bank Management (NIBM) where he shared dais with the RBI governor Subbarao.

Basu also observed that the growth estimate this year at 8.6% would remain "intact".

In his address, Subbarao said translating growth into poverty reduction was important and one of the challenges faced by the banking sector in India was that of  "financial inclusion."

"Banks have to increase their efficiency and reach out to remote areas and the poor," he added.

The RBI governor also asked banks to find innovative ways to bear the burden of increased investment in infrastructure sector targetted at $1 trillion in the next five years.

"Much of this burden will fall on the banking sector," he noted.