Inflation control becoming difficult: PM

April 10th, 2008 - 8:54 pm ICT by admin  

A file-photo of Manmohan Singh

New Delhi, April 10 (IANS) The steep increase in prices of food and essential commodities was making inflation management a difficult task and could “hurt” macroeconomic stability, Prime Minister Manmohan Singh said here Thursday. “Sharply rising food prices can slow down poverty alleviation, impede economic growth and retard employment generation,” the prime minister said at a global conference on agro industries.

“A steep rise in food prices will make inflation control more difficult and can hurt the cause of macroeconomic stability. The constituency for economic reform, so necessary to stimulate economic growth, would also diminish,” he warned.

“We in India, too, are deeply concerned about rising commodity and food prices,” he told the conference, organised by the Food and Agriculture Organisation and the United Nations Industry Development Organisation (Unido), among others.

The prime minister, who has initiated a series of steps in the past fortnight to curb the steep price rise, warned that high inflation and persistent food shortages could also derail the efforts to promote reforms.

“Pressures would mount for restrictive trade practices.”

The prime minister’s comments come in the backdrop of India’s annual inflation rate shooting up to a three-year high of seven percent in recent weeks, amid falling food stocks and higher prices of essential commodities.

Manmohan Singh said the green revolution of the 1970s and 1980s had helped India come out of what was described as “ship-to-mouth” existence when the country was heavily dependent on imports by sea from the US.

“Now we are once again faced with a situation where rising demand for food grain and other food items is running into supply constraints, both domestically as well as internationally,” he said.

“The global community and agencies must fashion a collective response that leads to a quantum leap in agricultural productivity and output so that the spectre of food shortages is banished from the horizon once again.”

Referring to the use of food grain for alternate fuels, the prime minister said this was adding another dimension to the global food security and sought to link it with the galloping oil prices.

“What this has done is - for the first time, there is a direct linkage between oil prices and food prices. Food markets have got interlinked to oil markets, making food policy an extremely complex and uncertain issue,” he said.

“It is particularly worrisome that the new economics of bio-fuels is encouraging a shift of land away from food crops.”

Earlier, Manmohan Singh was conferred the Agricola Award, instituted by the Food and Agriculture Organisation in 1976. He said the award was a recognition of the work done for Indian agriculture by its farmers, agencies and individuals.

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