Encouraged by the likelihood of a good monsoon, Planning Commission deputy chairman Montek Singh Ahluwalia today said the double-digit inflation would decline by December, and said he expected economic growth to exceed 8.5 per cent this fiscal.
Ahluwalia said the Reserve Bank of India's monetary policy would be back to normal soon and monetary actions would not hurt growth. The RBI had drastically softened policy rates to offset the impact of the global financial crisis last year.
"Inflation in double-digits is not acceptable. You will see inflation coming down by this calendar year-end. A gGood monsoon will help to bring down prices," Ahluwalia told reporters in New Delhi.
Inflation, based on movement in wholesale prices is hovering above 10-per cent mark. It was 10.16 per cent in May, and as per the revised estimates, it had exceeded 11 per cent in March.
Inflation figures for June will be out on Wednesday and would partly reflect the increase in prices of petroleum products. The government recently deregulated petrol prices, leading to a hike of Rs3.5 a litre, besides raising diesel rates by Rs2 a litre, LPG by Rs35 a cylinder and kerosene by Rs3 a litre.
Agriculture minister Sharad Pawar has said there is likely to be a bumper crop this year with prospects of good rains. The India Meteorological Department had earlier revised its forecast and pegged the quantum of rains for the country for the June-September monsoon period at 102 per cent of the long period average (LPA).