"So far as inflation is concerned, yes, I do agree headline inflation is still high, perilously close to double-digit inflation," Mukherjee said at a press conference in Bangalore on Sunday after meeting with the chief ministers of southern states and the CEOs of public sector banks based in the South.
"I do hope if this trend continues, then the year-end inflation... by March will be 6-7 per cent," he said.
However, he highlighted that though overall inflation is high in the manufacturing sector, fuel and certain other commodities, food inflation has come down.
Food inflation fell sharply to a four-year low of 4.35 percent in the week ended 3rd December from 6.6 percent in the previous week, while headline inflation moderated to 9.1 percent in November from 9.7 percent in the previous month.
Talking about the global slowdown, Mukherjee said, "It's true that we are going through difficult times, not only in India, but also all over the world."
As per the latest assessment, there is no possibility of a recovery in the euro zone -- comprising 28 countries of the European Union -- till the third quarter of the next calendar year (2012), he said.
Mukherjee said as per another assessment, there has been slow recovery in the US economy, but how long it will continue and how far it is, is yet to be seen.
"The same is the story with Japan," he said, adding that the growth rate in many emerging economies has come down and the rate of inflation is also high in these countries.
"In that context, we are also facing problems," Mukherjee said.
India's GDP growth rate stood at 7.7 percent in the first quarter of 2011-12. However, it slowed to 6.9 percent in the second quarter, the slowest pace of expansion in nine quarters.
Addressing the chief ministers and bankers, the Finance Minister said agriculture credit flow was an important item on the agenda for their meeting today.
For the current financial year, the target for agriculture credit flow has been fixed at Rs 4,75,000 crore, against which the banking system has already extended credit of Rs 2,23,380 crore as of 30th September 2011, he said.
In the case of South Zone states, the figure is Rs 20,622 crore, he added.
"I have requested states to make efforts to generate awareness regarding the Short Term Crop Loans Scheme, where credit is available at an attractive interest rate of 4 per cent per annum for prompt repaying farmers so that the farmers can avail credit at cheaper rates," he said.
Mukherjee also reviewed the credit flow to minority communities in the South Zone. The total outstanding has increased one-and-a-half times in the last three years ending March, 2011.
The Finance Minister said fourteen large projects with a total investment of Rs 39,424 crore are pending for want of various approvals in the southern region."I have requested the Chief Ministers to pay personal attention to this aspect and review the status of approvals in large projects in their states. I have advised the CMDs of the PSBs to approach the state governments for expediting the approvals in projects financed by them," he said.