•What is your assessment of the economy with inflation at a 13-year high of 12 per cent and a slowdown in industrial output?

We should not rush to any conclusion based on a week’s data or a month’s data. This is a difficult year. Nevertheless, I expect agriculture and the services sector to do well and industry to moderate to a level which should not cause us too much distress. Overall, therefore, growth will still be robust. If you look at the latest CMIE estimate, the growth this year is expected to be 9.5 per cent. Therefore, going forward, I think 2008-09 will also be a good year in terms of overall growth. However, it will be a year when growth will be accompanied by inflation. The effort is to moderate inflation from now over the next six months.

•What is a realistic estimate of inflation tapering off? Do you expect inflation to come down to acceptable levels over the next six months?

This will depend upon international crude oil and commodity prices. We are fortunately insulated to some extent against food prices. In fact, in terms of food price inflation, we are among the lowest in the world over a 12-month period. But we are victims of crude oil and commodity price inflation. Depending upon how these prices behave, we can hope for either an early return to the normal path or a delayed return to the normal path. But we will return to the normal path. It is difficult to put a timeframe, unless you tell me how crude oil or commodity prices will behave in the coming months.

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