PM discusses economic situation with top advisors

Prime Minister Manmohan Singh today held informal consultations with top economic advisors and officials to discuss the present economic situation of high inflation and sliding growth.

The meeting discussed the Indian and global economic situation and was attended by RBI governor D Subbarao, Planning Commission deputy chairman Montek Singh Ahluwalia and Prime Ministers Economic Advisory Council chairman C Rangarajan, and senior officials.

The  dsicussions were held less than a fortnight ahead of the second quarter monetary policy review due to be announced on 25 October by the Reserve Bank, whichhas raised interest rates 12 times in the last 18 months to curb rising prices.

Analysts say the headline and food inflation data suggests RBI may continue with its current hard monetary poicy as the near double-digit inflation is substantially in excess of the apex bank's estimates.

Rangarajan had said yesterday that the meeting would consider policy options on growth and inflation; headline inflation stood at at 9.72 per cent in September as food products, fuel and manufactured goods grew costlier, a development that is likely to prompt RBI to continue with its policy of monetary tightening.

The economy grew by 7.7 per cent in the first quarter, the slowest growth in 18 months, against 8.8 per cent in the same period of the previous fiscal, while industrial output remained subdued for the second consecutive month in August, registering a growth of just 4.1 per cent.