Govt's easy monetary policy may remain through March - pane

India's accommodative monetary policy may continue until the end of March, with the need for tightening once inflation picks up, a government panel that advises the prime minister said on Wednesday. Former Reserve Bank of India (RBI) governor C. Rangarajan, who heads the panel, said growth in the fiscal year that ends in March 2011 would accelerate to 7 to 8 percent after growing by about 6.5 percent in 2009/10, with inflation at around 6 percent by the end of March 2010. "The stance of monetary policy will have to change from its highly accommodative position. But that has to wait. It will depend on the growth prospects of the economy and also inflationary pressures," Rangarajan told a news conference. The Reserve Bank of India is expected to keep interest rates on hold when it meets for its quarterly policy review on Oct. 27, with many economists predicting a tightening in rates starting in early 2010. The Reserve Bank of India slashed its key interest rate by 425 basis points to 4.75 percent between October 2008 and April and the government cut import and factory gate duties and boosted spending to shield India from the worst of the global downturn. India's wholesale price inflation rose by 0.92 percent in the year through Oct. 3, below forecasts, but economists expect it to accelerate quickly in coming months as the base effect from last year's high energy and commodities prices recedes and food prices remain high. The Prime Minister's economic advisory council also forecast a consolidated fiscal deficit, which includes shortfalls at the state level, of 10.09 percent of GDP in the current fiscal year, compared with 8.6 percent last year, and the influential panel urged a return to fiscal consolidation. Its report can be found by clicking .The Indian economy grew by 6.7 percent in the fiscal year that ended in March, slower than the 9 percent or more in the previous three years, and top government officials have repeatedly stressed the need to maintain pro-growth policies until a recovery gains momentum.