Inflation dives to nine-month low--

India's headline inflation fell to a nearly nine month low of 6.84 per cent mainly on account of cut in domestic fuel prices after nearly 20 per cent decline in the global crude oil prices and declining prices of vegetables, fruits, pulses and iron, steel items-- the lowest in nine months.A Rs 5 per litre cut in petrol prices and Rs 2 per litre reduction in diesel rate on December 6 helped bring down inflation.

At the same time, the government said it was seeking extra spending of about $9 billion for the current fiscal year to the end of March as part of a fiscal stimulus to lift economic growth and offset the impact of the global slowdown. 

Inflation, measured by wholesale price movement, dipped by 1.16 per cent for the week ended December 6 from the previous week, triggering demands from the industry for further cuts in key policy rates by the Reserve Bank.

Commenting on the decline, FICCI secretary general Amit Mitra said, "RBI should cut interest rate expeditiously and by a significant quantum. It must also ease availability of credit further."

Nosediving of inflation to 6.84 per cent coupled with falling oil prices is likely to trigger more lending rate cuts upto one per cent by Banks, economists said . Many state-owned banks and a few private sector banks had slashed their prime lending rates after RBI's monetary measures rate and finance minstry's calls for immediate rate reductions. However, if the decline in the inflation continues in this pace, that may pause policy hurdles by mid-next year.