Inflation to cool down by Dec: Rangarajan, Naina Lal Kidwai

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New Delhi, Sep 15 (UNI) Former Chairman of Prime Minister's Economic Advisory Council C Rangarajan today projected the inflation rate to come down to 10 per cent by December from the present level of around 12 per cent, thanks to cooling down of international crude oil and food prices and their impact on domestic prices.

''My estimate is that probably by December, inflation rate may go down to 10 per cent,'' Mr Rangarajan, who is now a Rajya Sabha member, told reporters here.

Dr Rangarajan said if inflation was low a year-ago period, the comparative inflation in the current year will look higher.

Inflation stood at 12.10 per cent for the week ended August 30, 2008, despite moderation for three weeks in a row.

HSBC India Country Head Naina Lal Kidwai voiced a similar view that inflation was likely to move Southwards in view of the lower crude and food prices in international markets.

She said, ''if inflation rate moves down, then interest rates cannot be far behind,'' adding that the government expects inflation to come down to eight to nine per cent by March.

''The good news is that inflation is moving downwards'' and the high interest rates scenario may also change.

Ms Kidwai said even though international crude oil prices are low and food prices are cooling off, yet it is to be monitored how inflation rate moves between now and March. This was a critical year, she said.

She said inflation was a phenomena not peculiar to India but had affected most Asian countries.

Asked whether the retail loan segment of HSBC had been affected, Ms Kidwai said consumer loans were considerably down due to high interest rates.

Asked whether the US sub-prime crisis had affected India, she said the impact has been mostly on Foreign Institutional Investments (FII) flows and not much on the interest rate scenario. However, the FDI prospects were bright, she said.

Ms Kidwai said the Indian interest rate scenario has mostly been affected by local factors and has little to do with the housing market crash in the United States.

Regarding the global turbulence's impact on India, Ms Kidwai said its effect was mostly on inflation.

She said this was an opportunity for India to step up investment and growth in the agricultural sector.


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