Inflation to be contained; FM paints rosy picture of economy

New Delhi, Sep 8 (UNI) Painting a rosy picture of the Indian economy for the year 2006-07, Finance Minister P Chidambaram today said that despite increased prices of wheat and pulses, headline inflation will be contained between 4.5 and five per cent, in the current financial year.

Addressing a press conference here, the Finance Minister said that while the governmet needs to improve the supply management of wheat and pulses which impacts the common-man, necessary fiscal measures will be taken to bring down the inflation to below four per cent.

''It is the intention of the government to contain inflation.

Current inflationary pressures are mainly on account of oil prices and some supply side constraints in the availability of wheat and pulses. Steps have been taken on the fiscal side to moderate the price situation. We are confident tha we can contain inflation at 4.5 per cent to five per cent, and further efforts will be made to bring down the rate of inflation in due course. We will not hesitate to take further fiscal steps'', he said.

The annual rate of inflation today crossed the five per cent mark to stand at 5.01 per cent for the week ended August 26, as compared to 4.91 per cent last week due to an increase in food prices, despite the government's steps to contain inflation.

Commenting on Agriculture and Food Minister Sharad Pawar's statement that the notification for bringing down the customs duty to zero per cent would be issued soon, the Finance Minister said the decision would be taken by the Cabinet Committee on Economic Affairs (CCEA), after the finalisation of the import tenders is notified to the Finance Ministry.

The Finance Minister said that the issuance of controversial Participatory Notes by the hedge funds would continue, pending a final view of the government on the recommendations of the Tarapore Committee on Convertibility.

''The Committee with two dissenting views has given its recommendations. We will take other views on board and then take a final decision'', Mr Chidambaram said.

He said the GDP growth would be maintained at eight per cent during the 10-quarter tenure of the UPA Government. ''The virtuous cycle of growth and savings, that appears to be already underway, is likely to continue for some more years'', he said.

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