No risk of deflation, says Govt.

However, "It is a good development," he said of the falling inflation rate. "It gives us reassurance that we can take measures to stimulate the economy."

Agrees Abhijit Sen, noted economist and a member of the Planning Commission. "I don't think we are heading towards deflation. It would be playing up (the issue)... This is not a thing to worry as yet," Sen said.

"Last year around this time, prices started rising sharply. The point simply is, one can't rule out some fall in prices because of decline in commodity prices in the global market," he added.

Suresh Tendulkar, chairman of Prime Minister's Economic Advisory Council, said the sharp fall in inflation is due to base effect and "it may fall in the negative territory in the coming weeks." However, it should not cause any concern as demands are picking up, he said.

Agrees Saumitra Chaudhuri, member of Prime Minister Economic Advisory Council.

"If we look at the three month seasonally adjusted rates, you will find that the pulling down was much more strongly pronounced at the end of December and in January and now it is headed back to zero. So this is not deflation," Sen said.