Inflation to moderate to 6% by yr end: Plan panel

The Planning Commission today exuded confidence that inflation would moderate to 6 per cent by December end from over 8 per cent currently, mainly on account of good farm output.

The agriculture sector growth output during 2010-11, according to Planning Commission member (agriculture) Abhijit Sen, is expected to be about 7 per cent, the highest in the Eleventh Plan.

"The Wholesale Price Inflation would come down to 6 per per cent by December. Food inflation would also come down to 6 per cent level by December," Sen said when asked about the impact of good Kharif this year on WPI and food inflation.
    
Food inflation has declined by 0.84 percentage point to 15.53 per cent for the week ended October 9 due softening of vegetable prices.
    
The overall WPI inflation for September rose to 8.62 per cent, from 8.5 per cent in the previous month.
    
"The farm growth would be good this year because of (favourable) weather (conditions). It will be certainly over 5 per cent. It would be at least 6 per cent and it could be over over 7 per cent," Sen said on the sidelines of an 'Evaluation Conclave 2010'.
    
"The (farm growth) estimates are on the basis of good Kharif crop...We don't know about the Rabi crop," he added.
    
The farm growth is significant in the back drop of high food prices in the country. The performance of the farm sector was dismal in the previous fiscal as the growth was just 0.2 per cent against the annual average target of 4 per cent in the 11th Plan (2007-12), on account of widespread drought.
    
In the first year of the 11th Plan, the farm growth was 4.7 per cent and it slowed down to 1.6 per cent in 2008-09. The annual average farm growth target of 4 per cent for the 10th Plan (2002-07) was also not achieved as it remained 2.13 per cent.
    
The deceleration in agriculture growth which began in the Ninth Plan (1997-02) period is a major area of concern as half of country's population derives greater part of their income from agriculture.
    
The annual average farm growth which was 4.72 per cent in 8th Plan (1992-97), slowed down to 2.44 in 9th Plan and further to 2.13 per cent in 10th Plan period.