Rangarajan for monetary tightening

New Delhi: The Reserve Bank of India will have to continue with its monetary tightening policy to curb the inflation that continues to remain in the uncomfortable zone, Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan said on Friday while forecasting that headline inflation may come down in coming months falling from a level of 8% in February to 7.5% in March and further down to more confortable level of 6% in the next financial year.  “The inflation rate continues to remain high and therefore, monetary policy will have to remain tight in order to ensure that the inflation rate is brought down,” Rangarajan said on the sidelines of the Skoch summit in the Capital.  The apex bank has already revised key policy rates eight times this year to squeeze liquidity from the system and put a check on rising inflation on a the short term.  The measures have helped in bringing down headline inflation from double digit mark earlier to 8.3% in February. Rangarajan said that while there were positive indications that inflation may fall further in coming months, concerns remained on high crude prices that may get rise furtrher in wake of ther Libyan crisis and act as deterrant for checking inflation.  “If the crude oil prices remains at a high level, this could impact government finances and price level,” he said. On growth, Rangarajan said that the Indian economy may grow by 8.6% in the current fiscal and 9% in the next financial year. However, inflation and deficits are constraints to 9% sustainable growth, he added. Rangarajan also exudede confidence that capital inflows of around $60 billion in the year will keep the current account deficit in check during 2010/11 and finance the deficit levels of just over 2.5%.