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New Delhi, March 9 /--/ Chief economic advisor Kaushik Basu today said inflation would cool down by April due to good agricultural production.
"With better food production inflation will die down. Food inflation is high, it's a concern. My own expectation is by April-May the base effect would have gone," Mr Basu said.
The government needs to take action and has taken action and that is why we are witnessing some decline in food prices, Mr Basu said, adding the overall average inflation will be around 4 per cent for 2009-10.
Earlier he had said though fuel prices would lead to a marginal rise in WPI inflation, however, a lower fiscal deficit in the long-run would dampen the average inflation.
Owing to changes in the tax structure announced in the Budget 2011, fuel prices have gone up and as a result, the WPI will rise by 0.4 per cent, he had said.
In the Budget, the government hiked customs duty on petrol and diesel to 7.5 per cent from 2.5 per cent while excise duty was raised by Re 1 on non-branded (normal) petrol and diesel.
Meanwhile, minister of state for finance Namo Narain Meena in a reply to the Rajya Sabha said the hike in prices of items could be attributed to expectations of supply-side constraints of food items, especially due to unfavourable Southwest monsoon. (PTI)
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