5-6 percent inflation will be 'worth it': Kaushik Basu

Last Updated: Thu, Dec 20, 2012 04:19 hrs

Former chief economic advisor and now World Bank chief economist Kaushik Basu Wednesday observed that a 5-6 percent inflation is not "too high" and if it can be kept at that level it would be "worth it".

Inflation rate, as measured by the Wholesale Price Index (WPI), dropped to a ten-month low of 7.24 percent during November from 7.45 percent a month ago and 9.46 percent in the corresponding month a year ago.

Commenting on the moderation in inflation, Prime Minister's Economic Advisory Council chairman C. Rangarajan had said India should work towards a "comfortable level" of 5-6 percent inflation rate.

Talking to the mediapersons here, Basu said a 5-6 percent inflation was not too high.

"If inflation can be kept to say 5 percent or 6 percent that is not too high. We know during periods of very high growth, like we saw in South Korea in 1970, when it was growing rapidly. If we can keep it at 5-6 percent, it will be worth it," he said.

The Reserve Bank of India (RBI), in an anti-inflationary stance, kept its policy interest rates unchanged Tuesday, ignoring growing demands from India Inc to lower them in its mid-quarter monetary policy review.

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