Thaindian News

New Delhi, Aug 4 (IANS) Every step was and will be taken to tame prices, but the public at large must appreciate that certain factors like supply shortfall and hoarding were beyond the federal government’s control, Finance Minister Pranab Mukherjee said Wednesday.
Replying to a debate on the government’s response to rising prices in the Lok Sabha, which had prevented the conduct of business for the whole of last week, the finance minister said on issues such as prices both the federal and state governments must act together.

“The powers are vested with states. Essential Services Maintenance Act is the states. But I do not intend to pass on the buck to them. It has to be done collectively by the union and state governments,” he added, alluding to action required to prevent hoarding.

Touching upon the recent hikes allowed in prices of petroleum products, Mukherjee said in his 50-minute reply it was unavoidable due to perpetual increases in international crude oil prices, and added that reducing tax was not a solution.

“You must understand, 34 percent of the revenues of the states governments come from petroleum products. I have to find alternative mechanisms. But I agree that petroleum prices must be rationalised,” he said.

In this regard, he said, a uniform goods and services tax across the country — proposed to take effect from April 1 next year to replace the central excise duty and the various state levies — will help in augmenting resources and addressing inflation.

“Constitution Amendment Bill must be introduced in this session for Goods and Services Tax. Otherwise it will get delayed further,” he said, even as he sought to reason why stronger measures aimed just at bringing down prices were not taken.

“Too much money chasing too few goods will automatically fuel inflationary expectations. But we have deliberately injected money into the system to ensure growth,” he said, adding that it was also necessary to help exports and ensure remunerative prices for goods.

Referring to pulses and edible oils, the finance minister said it was unfortunate that the country was hit by the twin supply-side factors - shortfall in domestic output and lack of adequate availability in the international markets.

He hoped with a good kharif (summer crop) output, prices of pulses and edible oils would come down.