Montek brushes aside fears of deflation

Planning Commission Deputy Chairman Montek Singh Ahluwalia today allayed fears of the country sliding into a deflationary phase and termed the current low level of inflation as good for the economy.

"It is a good thing that it has come down. It is good for the economy. We said it will come down all the time, so it is not a surprise. What we have been saying is correct that inflation will not be a problem," Ahluwalia said.

Inflation declined to over three decade low of 0.44 per cent for the first week of March.

Asked if the country was heading towards deflation, Ahluwalia said: "No it is not, definitely not. The objective of inflation policy should be to keep inflation at low and modest levels. It cannot be the objective to have deflationary policies. I do not think we are going to have it."

He, however, said inflation may further fall for a short duration of time.

"...For one week if it goes a little bit below you can't call that deflation. But it is true that it has gone down sharply and I think it should remain at a low level," he said.

When asked if inflation could touch sub-zero level, Ahluwalia said, "What happens for one week is not very important, because you can suddenly get a dip for one week if some price goes down. That's not what I call a deflation."