Economy won’t slip into deflation: Montek

Ahluwalia said economy is not heading towards deflation despite inflation nearing zero-level.

Written by Agencies | Hyderabad | Published: March 26, 2009 3:57 pm

Planning Commission Deputy Chairman Montek Singh Ahluwalia on Thursday said the Indian economy is not heading towards deflation despite inflation nearing the zero-level in the past few weeks.

Inflation rate fell to 0.27 per cent for the second week of March from 0.44 per cent for the week ended March 7.

“I don’t think we are heading towards deflation. It is true that inflation rate has come down…this is because at this time last year,there was a sharp increase in prices,” Ahluwalia told reporters on the sidelines of the 41st annual convocation of Acharya N G Ranga Agricultural University in Hyderabad.

He further said that the inflation rate would go down very sharply. “It can go to zero or may even be negative for a week or two. It has happened in the past…during 1970s the inflation rate became negative for a brief period. But I don’t expect that there would be deflation at all now,” Ahluwalia added.

On rise in crude oil prices recently,he said it was an indication of recovery of global economy and that as per the estimates,industrialised nations would see a shrinkage in 2009 by 3 per cent,compared to the previous year.

“Estimates are that this (economy) would stabilise by the second-half of 2009,” Ahluwalia said.

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