Inflation surges to 13-month high of 8.56 pc in Jan

New Delhi, Feb 15 (PTI)Inflation surged to 13-month high
of 8.56 per cent in January, amid fears that withdrawal of
stimulus package in the upcoming Union Budget could lead to
higher taxes and put further pressures on prices.

At the same time, the surge in rate of price rise, which
has already breached the estimate of the Reserve Bank of India
(RBI) estimate of 8.5 per cent by March-end, could also prompt
the apex bank to further tighten the monetary measures at a
time with the economy is projected to grow even beyond 7.2 per
cent estimated by Central Statistical Organisation.
Projecting that inflation would touch 8.5 per cent by
current fiscal-end, the RBI is sucking out about Rs 36,000
crore from the banking system.
As the demand for partially withdrawing stimulus
measures gathered steam with industrial growth at 16-month
high of 16.8 (December) and economy projected to grow more
than 7.2 per cent, increase in inflation may present a
difficult picture before the Government over the issue.
"There is a tough balancing act for the Finance Minister
in the Budget. If he withdraws stimulus then it would put
pressure on inflation. However, withdrawing stimulus is
necessary to reduce fiscal deficit," Crisil Principal
Economist D K Joshi said. PTI BSP
RDM


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