Inflation to fall to 6-7%; no need for capital controls: Basu

Chief Economic Advisor Kaushik Basu today said that inflation may come down to 6 to 7 per cent in the next three months and that there was no need for any capital controls to check inflows as have been at a comfortable level.

"My expectation is inflation will be on a downward path, but fluctuating over the next three months, before a sharper downward decline. I expect it to be 6 to 7 per cent within the next three months," Basu said after releasing a UN report.

The wholesale price-based inflation for March was 9.9 per cent, higher than the Reserve Bank's projection of 8.5 per cent. The spike in inflation was led by food inflation that remained over 16 per cent in April after crossing 20 per cent in December.

Further, on the rise in capital inflows, Basu said the inflows are at a comfortable level and do not call for any controls to check a possible overheating of the economy.
    
"Actually there is not a surge in capital inflows. It's flowing very comfortably. We have seen bigger inflows earlier into India. So, I don't think it is really a situation where you need to take any capital control (measures)," he said.
    
He said the country already has a couple of capital controls that have served the economy well.
    
"I don't think it's really a kind of occasion where you need more on that ... Right now the situation is not worrying because it's coming in very comfortably," he added.