Inflation to average at 4.5-5% this fiscal: Pranab

Finance Minister Pranab Mukherjee today exuded confidence that average inflation during the current fiscal will be at 4.5-5 per cent, even though he expressed concern over the impact of price rise on the common man.

"Average annual inflation rate will come down substantially...I think it would not be more than 4.5-5 per cent," he told business channel CNBC TV18 this evening.

The inflation has crossed 10 per cent in February but marginally declined to 9.59 per cent in April. But food inflation is still hovering at 16-17 per cent.

The moderation in inflation, Mukherjee said, would depend on the monsoon. "The first prediction is encouraging. They (the Met Department) are saying it would be a normal monsoon this year."

High food inflation, the minister said, is a matter of concern as it affects the common man the most. The government has already taken steps to provide subsidised food through PDS to the vulnerable sections. "But unfortunately that mechanism (PDS) was not very effective during the recent crisis," he said.

On the Greece crisis, Mukherjee said no economy can insulate itself from the impact of global developments. "Volatility of capital flows needs to be watched. We have to be watchful of the developments in Europe."

On the proposed direct taxes code (DTC), which will replace the Income Tax Act from next year, Mukherjee said, "The revised draft is more or less ready. We have taken into account the concerns of all stakeholders."