Inflation, which crossed the 1 per cent mark for the week ended October 10 after seven months, is likely to surge to 10 per cent by March end driven by surging food prices, low base effect and rising manufacturing costs, industry body Assocham said.

However, the industry chamber wants the government to keep soft monetary stance, adopted during the global financial meltdown, unchanged as it feel that the resultant rise in interest rates could hurt private investment.

It said, as the government has to borrow large amount of money from the market to finance the high fiscal deficit, estimated to be 6.8 per cent of GDP this fiscal, the knee jerk reaction on inflation could cause sharp rise in interest rate scenario and crowding out of private investments, it added.