The Indian Planning Commission Monday said food prices will come down in the next two months easing the overall inflation, which is currently at over 8.5 per cent.
"The trend is that food price will come down in the next two months. I am sure that the trend down on food prices will bring down the overall inflation in the next two months,"
Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters.
The wholesale price inflation (WPI) rose to 8.56 per cent in January, the highest in over 13 months, shooting past the Reserve Bank of India's (RBI's) forecast of 8.5 per cent for this fiscal end.
The WPI hike was mainly because of a surge in prices of food items such as sugar, potatoes and pulses. Overall inflation in December was 7.31 per cent.
In January, sugar prices rose by 58.96 per cent year-on-year while potatoes turned costlier by 53.39 per cent and pulses by 45.64 per cent.
About the government's borrowings next fiscal, Ahluwalia said, "If fiscal deficit goes down the govt borrows less that year...means more money is available for private sector."
India's Finance Minister Pranab Mukherjee has projected a fiscal deficit of 5.5 per cent (of GDP) in his budget for 2010-11 against the estimates of 6.7 per cent for this financial year.
Ahluwalia Monday met Prem Kumar Dhumal, Chief Minister of the northern Indian state of Himachal Pradesh, and both agreed on a plan size of Rs 3,000 crore for 2010-11 for the state.
Ahluwalia asked the state government to focus on improving tourism and horticulture as the sectors have immense revenue generation potential, he added.
Expressing satisfaction over the state's plan outlay of Rs 3,000 crore for 2010-11, Dhumal told reporters, "We are happy with the plan size. The state's plan outlay will have top priority for social services sector and 33.69 per cent of
the total funds will be given to the sector."
On extension of tax holidays for the hill states, Dhumal said, "The central government must continue the tax holiday for Himachal and Uttranchal as well till 2013."
The central government had provided tax holiday for the states of Jammu and Kashmir, Uttranchal and Himachal Pradesh in 2003. But now the government is continuing this benefit only for the northernmost Indian state of Jammu and Kahsmir.
The tax holiday includes 100 per cent income tax and excise duty exemption to all those setting up their units in the state.