New Delhi: With crude prices still falling, inflation is expected to remain under control, Finance Secretary Rajiv Mehrishi said Wednesday while emphasising that industrial production growth shows that the economy is on mend.
Industrial production grew at four-month high of 3.8 percent in June as manufacturing paced up.
"It (growth in IIP for the month of June) shows that the economy is on mend. It is consistent with the growth in indirect taxes," Mehrishi said.
Indirect tax revenue has also jumped over 37 percent to over Rs 2.1 lakh crore in the April-July period this year on the back of higher excise duty collection.
On fall in retail inflation in July, the Finance Secretary said, "Inflation is also well within control. Crude oil prices are still falling."
Retail inflation fell to multi-year low of 3.78 percent in July on account of cheaper food prices, including of vegetables, fruits and cereals.
The Finance Secretary said that retail inflation in the future should be well within reasonable limits.
"You can't predict these things (retail inflation) in the future but it should be under control. It should be well within reasonable limits. Whether it will be 5 percent or 4.4 percent its difficult to say but it should be reasonable figure, which is acceptable," Mehrishi said.
Making a case for cut in policy rates as inflation is easign, a senior finance ministry official said, "We have maintained that high interest rates are hurting the economy. There is a case for interest rates to come down sharply."
RBI on August 4 had spurned government's call to cut interest rates.
In the run-up to the August 4 bi-monthly monetary policy, the government had vociferously made a case for further lowering of interest rates, but RBI Governor Raghuram Rajan maintain status quo because of inflationary concerns.
