Moderation in inflation good, RBI knows what to do: Montek

Planning Commission Deputy Chairman Montek Singh Ahluwalia has termed the moderation in inflation as "very good signal" for the economy and hoped the Reserve Bank of India (RBI) would take a cue from the decline in price rise.

Inflation measured in terms of Wholesale Price Index (WPI) moderated to 7.24 per cent in November, from 7.45 per cent in the previous month. It was 9.46 per cent in November 2011.

"I think moderation of inflation is a very very good signal. We expect it to moderate slowly and it is good that it has happened," Ahluwalia said.

The Indian economy grew by 5.3 per cent in the July-September period of the current financial year (2012-13), pulled down by poor performance of manufacturing and agriculture sectors, showing persistent signs of slowdown.

The gross domestic product (GDP) had expanded by 6.7 per cent in the same period of last financial year. It had grown by 5.5 per cent in the first quarter (April-June) of 2012-13.



"I don't regard 7+ per cent inflation as comfort zone. But the important thing is that if you think it is heading down, then may be the time has come to recognise that inflation is clearly softening and growth is weak and I am sure that RBI knows what to do," Ahluwalia said.

On the government's decision to set up a Cabinet Committee of Investment under the Prime Minister, the Plan panel deputy chairman said: "I think that is an extremely positive development. It reflects the fact that the government is aware that we need special mechanism for decision making to speed up implementation. It is very good signal."

with inputs from PTI