Over-optimistic forecasts by policymakers predicting when Indias stubbornly high inflation would ease have hurt the governments credibility,said Montek Singh Ahluwalia,deputy chairman of the Planning Commission said on Sunday. Ahluwalia,said he expected headline inflation to ease to 7-7.5 per cent by March on the back of monetary tightening by the Reserve Bank of India and easing global inflation. He also said economic growth for the fiscal year 2011-12 would likely be about 7-7.5 per cent,while it was not impossible that the fiscal deficit could swell to 5.5 per cent,against the governments target of 4.6 per cent for the year. Its true that inflationary pressure is higher than what we had thought it would be, he said in an interview to news channel CNN-IBN broadcast on Sunday afternoon. Ahluwalia also conceded that he went wrong while projecting moderation in inflation which remains near the double-digit mark. It is true that we were hoping that this (moderation in inflation) will happen earlier,to that extent our credibility becomes a question, he said in the interview when asked why governments repeated projections on inflation proved false. By February,you will have the January data and if it turns out that inflation is not coming down by then,then we really dont know what we are doing, he added. Ahluwalia also said there was still no political consensus on opening up Indias multi-brand retail sector to foreign direct investors. The policy,aimed at easing inflation and unclogging supply bottlenecks,may come before the cabinet next week,a senior government source has said. The inflation reading for October was above forecasts at 9.73 per cent as the cost of food and fuel rose. The RBI has hiked rates 13 times since March,2010. All the research shows that monetary tightening takes at least 3-6 months, Ahluwalia said.
