Not surprised if RBI increases rates by 25%: Rangarajan

Coimbatore, Feb 5 (PTI) With spike in food inflation, CRangarajan, Chairman of Economic Council to the Prime Ministertoday said he would not be surprised if the RBI hikes the rateby 25 basis points to contain it.

Replying to a question whether he expected another hikein the rates due to the increase in food inflation, Rangarajansaid, "I will not be surprised if the RBI raises the rate by25 basis points".

Driven by high prices of fruits, milk, meat,eggs, India''sfood inflation crossed 17 per cent for the week-ended January22.

Rangarjan who was speaking on the sidelines of a bookrelease function organised by Southern India MillsAssociation, said RBI would continue to act as long as therewas a need to contain the rapid escalation in food prices.

He said food inflation was expected to decline.

With the good monsoon, he said, the situation is alreadyimproving; prices of fruits and vegetables have alreadystarted declining and by middle of February it would declinefurther.

He added the overall inflation would also come down to 7per cent by March.

To another question on removing restrictions on FDI toattract more investments, he said the restrictions differedfrom sector to sector and the Government would examine whatcould be done over the issue.