Kolkata, Dec 31 (IANS) Union Finance Minister Pranab Mukherjee Thursday said liquidity in the system is not responsible for driving up inflation, specially the rise in food prices.
“We have discussed with the Reserve Bank of India and up to now there is no reason to believe liquidity is responsible for rise in prices,” Mukherjee said while addressing the annual general meeting of the Indo-American Chamber of Commerce here.

The finance minister said the impact of drought was exaggerated, and added that the comments of the government over likely shortages of food gave a chance to international suppliers to increase prices and at the same time, encouraged hoarders in the country.

“We have put food items on the Open General Licence list but still there is no surge in imports,” he said.

To mitigate the harsh impact of soaring food grain prices on the less privileged sections of the society, Mukherjee said the government’s food procurement in the current year (2009-10) would surpass the previous year’s level.

“Last year’s procurement was made at record levels and going by this year’s trend, we believe that level would be crossed,” he said.

He said agriculture growth would be negative in the October-December period.

“Agriculture remains a disturbing area for the government and we expect it to clock a negative growth in the third quarter,” he said.