Inflation not in comfort zone: Basu

The Chief Economic Advisor to the Union Finance Ministry, Kaushik Basu, has said although inflation has not gone out of hand, it is still not in the government's comfort zone.

"WPI inflation figure is 8% compared to 11% this time last year. It is not going out of hand, but not in the comfort zone," Basu said at an interactive session here last night.

In April and May this year, it was expected that inflation would be below 8 and 7%, respectively, after which it would stabilise at around 5%, Basu said.

While the RBI had been following a tight monetary policy to control inflation, the government is also doing its best, he said.

He said while RBI action usually takes six to nine months to have an effect on the system, it is three months before the impact of steps taken by the government are felt.

Although India was on a high growth trajectory, inflation and corruption were the two big clouds looming over the country, he said.

While the government was trying to bring down inflation, corruption needed to be attacked frontally, for which certain changes in bribery laws are needed.

sked about freeing diesel prices, Basu said that it should have been done a long time ago.