New Delhi: Expressing concern over rise in inflation, Finance Minister Jaswant Singh on May 8 said macro economic situation remained "comfortable" in 2002-03, and the adverse impact of Iraq war was likely to get "neutralised" further when the country gets a normal monsoon this year.

"The Finance Ministry is concerned and watchful over the increasing rate of inflation but there is no reason for alarm," Singh told the Parliamentary Consultative Committee.

He said the major contributing factors to the rise in inflation rate was the rise in oil prices due to gulf war, drought effect on edible oils and better prices in manufacturing sector.

Addressing the meeting on 'Gulf War -- Impact on growth and inflation', Singh said "the macro economic situation in 2002-03 remained comfortable despite drought, uncertainty on external front and delayed global recovery."

The Finance Ministry had conducted a study in September 2002 to assess the likely consequences of Gulf War, he said, adding "the impact of war was already on the reverse gear with global oil prices falling to 35 dollar per barrel and six months futures in crude oil touching 22 dollar per barrel."

"The effect of Gulf war on our economy could be further neutralised with a normal monsoon this year, as projected by the meteorological department." he added.

PTI