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Keeping inflation low high priority: FM
January 25, 2008 16:53 IST
Finance Minister P Chidambaram on Friday said keeping inflation rate low and not high growth was a priority for the government.
"At the moment, we are comfortable with inflation below four per cent and growth above eight per cent... I will be in great trouble if inflation (rate) rises to six per cent this year," he said during a discussion on 'Should we fear slowdowns?' as part of the World Economic Forum in Davos.
His statement comes amid fear that a possible recession in the US can affect economies of developing countries, including India. "Between inflation and growth, what hurts the poor most is the inflation. That is why we must keep inflation low and this means reasonably high rate of growth," he said.
India's wholesale prices-based inflation rate grew by 3.83 per cent for the week ended January 12, compared to 3.79 per cent in the previous week, but was still under the Reserve Bank's target of under 5 per cent for the fiscal.
While saying that a slowdown in US economy may partly affect Indian exports, the finance minister said he was confident that the US economy would not move towards recession and would bounce back. "I think the US economy may bounce back and there is no conclusive evidence of recession in that economy. However, if there is slowdown in the US, Europe and other parts of the world, it will affect our exports," he said.
He said New Delhi would do everything to maintain the growth rate, while ensuring prices do not rise. He forecast India's economy to expand by 8.5 per cent in 2008-09 fiscal.