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The government needs to take "hard decisions" to create an environment for industry to grow, Prime Minister's Economic Advisory Council Chairman C Rangarajan said today.
He said in the current financial year, if targets relating to some of the public sector infrastructure areas like coal, power, roads and railways are fulfilled, then this itself would act as a stimulant for private investment. He also said RBI needs to take the growth factor into account. "But at the same time, we also need to wait for what happens to inflation. One more data point will come in the next few days. That will indicate whether the trend that was noticed earlier of decline in headline inflation continues," he said. Rangarajan added, "What we really need to watch out for is that what happens not only to headline inflation but also to the manufacturing inflation. The point is really that the trend noted in the manufacturing inflation will give us the idea as to what the RBI should do (vis-a-vis to cut the rate or not)."
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