"I hope we would prefer lower inflation, even if it means a 50 basis point cut in the growth rate," Jalan, currently a Rajya Sabha member, told reporters on the sidelines of a function.
He said the government needs to take hard decisions, but cautioned against being panicky.
"We should not be panicky. We must be able to take hard decisions," he said.
"If we need to cut total demand, it will be a hard decision. There is a trade off between lower inflation and growth," he said.
Headline inflation rate for the week ended April 26 surged to 7.61 per cent, the highest since November 8, 2004. Jalan said growth must stay in the region of 8 per cent and inflation must come down to 5 per cent.
"We should wait for the steps taken by the government and the RBI to yield results," he said.
