Food inflation will come down to 7 pc: Kaushik Basu

Pune: The downward trend in food inflation which has attained single digit now, would continue and touch seven per cent shortly, Chief Economic Adviser to Ministry of Finance, Kaushik Basu said on Thursday.

"Inflation has come down substantially and I expect it to fall quickly in another two months," he told reporters noting that food inflation figure which was earlier above ten per cent, had been reduced to 9.52 per cent now.

"It is not unexpected. What we had anticipated is happening", Basu said adding that the November-December (2010) inflation movement was considered temporary. By the end of fiscal, the inflation figure could be pegged at seven per cent, he said.

Basu was here to attend the convocation ceremony at National Institute of Bank Management (NIBM) where he shared dais with the RBI governor Subbarao. Basu also observed that the growth estimate this year at 8.6 per cent would remain "intact".

In his address, Subbarao said translating growth into poverty reduction was important and one of the challenges faced by the banking sector in India was that of " financial inclusion".

"Banks have to increase their efficiency and reach out to remote areas and the poor", he added.

The RBI governor also asked banks to find innovative ways to enable themselves to bear the burden of increased investment in the infrastructure sector envisaged in the next five year plan, to the tune of dollars one trillion.

" Much of this burden will fall on the banking sector", he noted.