UPDATE 1-Japan ruling party panel calls for 2-3 pct inflation

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* DPJ panel: Govt should set target, ask BOJ to achieve it

* Panel submits proposal to Finance Minister Noda

* Fin Min says will look at it (Adds details)

By Sumio Ito and Tetsushi Kajimoto

TOKYO, July 30 (Reuters) - Japan should set an inflation target of 2-3 percent to overcome deflation, a panel of the ruling Democratic Party said in a draft proposal on Friday, and the finance minister said the government would look at it.

Within that range, the government should each year decide on a price target for next fiscal year, and ask the Bank of Japan to achieve it, the draft proposal said.

The panel submitted the proposal to Finance Minister Yoshihiko Noda.

"We will look at it sincerely," Noda told reporters after the meeting.

The panel, which consisted of a group of lawmakers discussing how to pull Japan out of deflation, will work out a final proposal to present to senior Democratic Party officials.

It has made similar proposals in the past, but has only partly been reflected in the ruling party's official policies. (Writing by Leika Kihara, editing by Charlotte Cooper)