Inflation figures of the government agencies are in for a big dose of downward correction as commodity prices come off their highs. First off the block will be the Planning Commission. The Commission has projected a 6% rate of wholesale price index-based inflation by March 2009, incidentally just about the time the elections to the Lok Sabha are scheduled.

The projection is a full 100 basis point lower than the Reserve Bank?s estimate made in its first quarter review in July. These figures are up for review in the mid-season credit policy to be released on Friday by the RBI.

?The month-on-month inflation figure has declined, though year-on-year is still quite high. Our internal assessment puts the figure at around 6% by the end of the fiscal,? a top official of the Commission told FE.

After the Planning Commission and RBI, other government agencies will also release their revised estimates soon. Finance minister P Chidambaram will talk to the economic editors at the end of this week while the Prime Minister?s Economic Advisory Council will issue its revised estimate in January. The Council had projected 8-9% rate in March for inflation in its Economic Outlook for 20089.

Explaining the rationale for the downward revision by the Planning Commission, the official pointed that two major contributing factors for inflation ? global crude prices have come down from $149 a barrel to $65 while domestic food grains production ? are at comfortable levels. The lowered crude prices are expected to impact several downstream industrial sectors that use industrial oils, including paints and naptha, none of which depend on administered prices like those on petrol and diesel.

The changes will also mean a corresponding change in the GDP deflator, which is usually close to the consumer price index for industrial workers.

The revisions are important as government agencies, including the Planning Commission, will start their meetings with ministries soon to decide on Budget allocations for 2009-10 and also examine the trend in spending for the current year. The Indian government will spend Rs 7,50,883.53 crore in 2008-09, almost a fifth of the gross domestic product. A lower inflation will make it easier for the government to spread its resources better. The Plan panel needs the newer estimates as the base for these meetings along with the finance ministry.

The Planning Commission? projection of inflation is, however, higher than the assessment made by the government in May when it was forecast at below 5%. In fact, the projections of May, which had factored in fluctuating global oil prices, trends for food grain productions and the monetary and fiscal pressures, indicated that inflation could actually cool off to as low as 3.5% by March 2009 in a best case scenario.

Inflation for the week ended October 4 registered a dip of 0.36% to settle at 11.44% against 11.80% in the previous week. The year-on-year inflation was at 3.22% for the corresponding period a year ago. Soaring inflation gave a tough time to the policy makers as the inflation figures touched a 13-year high at 12.82% for the week ended August 9.