Inflation is expected come down to 7.78 per cent this month on the back of a good monsoon and an increase in the area under rabi crops, the Institute of Economic Growth said in a report. In June, inflation is likely to further come down to 7.38 per cent, it said. Headline inflation for March stood at 8.98 per cent. Inflation in the country has been above 8 per cent since February, 2010.
It said that inflation in April may decline to 8.12 per cent.
“The area under rabi crops has gone up and the monsoon forecast for the 2011-12 agriculture year is positive. On balance, the inflation is likely to marginally go below the psychological 8 per cent mark in the next three months,” it added.
The recent cooling in food prices will also help in lowering inflation, it said.
The government has taken measures like tightening of the monetary policy to reduce inflationary pressures. Furthermore, according to experts, the RBI is likely to increase key policy rates by at least by 25 basis points in its annual credit policy review on Tuesday.
On India’s factory output, the report said that high growth in tax collection and exports is a positive sign for industrial growth.
“The Index of Industrial Production (IIP) growth is likely to be around 3.8 per cent in March,” it added. The IIP in February was 3.6 per cent.
