Inflation will take time to soften, says government

April 4th, 2008 - 9:11 pm ICT by admin  

A file-photo of Manmohan Singh

New Delhi, April 4 (IANS) As inflation surged to a three-year high of seven percent for the week ended March 22, the government Friday said measures taken to curb the price-rise will take some time to take full effect. From the office of Prime Minister Manmohan Singh to Agriculture Minister Sharad Pawar and Finance Minister P. Chidambaram to Commerce Minister Kamal Nath, there was optimism that inflation will be contained, albeit with a time lag.

“The government will take more fiscal measures, if needed, to check inflation. It will take some time for government measures to have positive impact on the price rise,” an official in Prime Minister’s Office said.

“All our efforts are being coordinated with various ministries, the central bank and the Planning Commission to ensure that the hardship faced by the common man is moderated. It is the government’s top priority now,” the official added.

Planning Commission Deputy Chairman Montek Singh Ahluwalia echoed a similar view and said that the measures taken by the government, like duty cuts essential commodities and ban on export of rice, would have an impact on inflation.

“The government will continue to keep vigil on the price rise. It will take some time - a month or so - for the measures to show results in terms of moderating inflationary pressures,” Ahluwalia told reporters here.

The country’s annual rate of inflation shot up to a three-year high of seven percent for the week ended March 22, from 6.68 percent for the week before, due to higher prices of essential items such as vegetables.

The inflation rate based on wholesale price index was ruling at a 13-month high during the previous week, as per data released by the commerce and industry ministry here Friday.

The statistics further showed that prices of minerals shot up 38 percent in just a week between March 15 and March 22, while vegetables were costlier by as much as 4.9 percent.

“The overall softening of prices will take some time,” said Agriculture Minister Sharad Pawar, even as Industry hoped the corrective measures would yield results soon and bring down prices of essential commodities to manageable limits.

“A few more steps should also be taken by the Reserve Bank of India to curtail interest rates, as also ensure sufficient liquidity to India Inc,” Venugopal N. Dhoot, president of the Associated Chambers of Commerce and Industry (Assocham), said.

The government also issued a fresh warning Friday to those who have been stoking inflationary pressures and said containing price rise was the top priority for the ruling United Progressive Alliance (UPA).

“We will not hesitate to take the strongest possible measures, including using some of the legal provisions we have against hoarding,” Commerce Minister Kamal Nath said on the margins of a tourism event in Singapore Friday.

The cabinet committee on prices Monday decided to impose a complete ban on the export of non-basmati rice. It also allowed all edible oils to be imported at zero customs duty.

The government also decided to continue the ban of the export of lentils for one more year from Tuesday, while customs duty on butter and clarified butter was reduced from 40 percent to 30 percent.

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