Thaindian News

New Delhi, Aug 4 (IANS) The government Wednesday asserted it was taking all steps to tame prices but that failed to satisfy the opposition and some of its allies who rapped it for its failure and asked it to immediately provide relief to the common man.
Replying to a debate on the government’s response to rising prices in the Lok Sabha, Finance Minister Pranab Mukherjee said the public at large must appreciate that certain factors like supply shortfall and hoarding were beyond the federal government’s control.

He 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 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.

However, opposition parties and the Leader of the Opposition and BJP leader Sushma Swaraj said the government’s response to the prevailing high inflation was mere rhetoric and lacked concrete measures on how to deal with the issue.

“The house had expected the government to at least announce some measures to address the burning issue of price rise. But it is disappointing that the finance minister justifies the price rise and appears least concerned over the matter,” said Swaraj.

At the conclusion of Mukherjee’s reply, sensing the mood of the house, Lok Sabha speaker Meira Kumar asked the government to take steps to bring prices under control.