Inflation to come below 10% in FY'09, says Montek

Planning Commission Deputy Chairman Montek Singh Ahluwalia today joined a host of economists who believe the country’s inflation will moderate to single digit in the next few months.

“It would come down below double digit this fiscal. I am sure of that,” the Oxford-educated economist told reporters on the sidelines of a seminar organised by industry chamber Ficci here.

The country’s wholesale price-based inflation is at a 13-year high of 11.98 per cent, just 0.02 per cent shy of 12 per cent. Reserve Bank of India (RBI) Governor YV Reddy feels inflation will ease to 7 per cent by the end of current fiscal.

The view has been endorsed by Prime Minister’s Economic Advisory Council Chairman C Rangarajan, who expects inflation to ease to around 8-9 per cent by the end of the year.

Rangarajan said if inflation goes further down it would mainly be because of oil prices, which has cooled to $118-a-barrel level yesterday after touching a high of $147 a barrel in July.

Admitting that the public expenditure on health is low, Ahluwalia said there is need to increase allocation for the health care sector.

Public-private partnership (PPP) can help leverage limited government resources to improve health services, he said.

PPP will also bring in an element of competitiveness in the sector, he added.

Ahluwalia asked corporate houses to build in a system of compulsory insurance while framing compensation packages for their employees.

Rashtriya Swasthaya Bima Yojana, which is expected to be rolled out in the next 3-4 years, will cover 300 million people below the poverty line, he said.

“We expect that in the next three to four years, the government would be able to offer health insurance to the Below Poverty Line (BPL) population when people would be able to place a demand on hospitals, both public and private,” he said.