Inflation may come down to 7% by FY12-end

The government today said the current fiscal may end with inflation of around 7%, driven by moderation in demand side pressures and record foodgrain production this year.

This is due to the demand side pressures moderating, as a consequence of the calibrated withdrawal of the fiscal stimulus and the tightening of credit by the RBI, along with record foodgrain production this year, Minister of State for Finance Namo Narain Meena said.

"As a result, overall WPI inflation is likely to decline from December onwards and the current fiscal may end with headline inflation of around 7%,"  Meena said in a written reply to the Rajya Sabha.

On the steps taken by the government to contain the rising inflation, he said, among other things, the import duties on pulses and edible oils (crude) have been reduced to zero.

Besides, the exports of edible oils (except coconut oil and forest-based oil) and pulses (except Kabuli chana and organic pulses up to a maximum of 10,000 tonne per year) has been banned, Meena said.

In addition, the Forward Markets Commission has suspended futures trading in rice, urad and tur dal. Stock limit orders were extended in the case of pulses, paddy and rice up to September 30, 2011, Meena said.