Steep rise in food prices will make inflation control difficult: Manmohan SinghApril 10th, 2008 - 10:03 pm ICT by admin
New Delhi, Apr 10 (ANI): At a time when consumers in India are bearing the blunt of spiralling inflation, Prime Minister Manmohan Singh on Thursday said that a steep rise in food prices will make inflation control more difficult.
A steep rise in food prices will make inflation control more difficult and can thereby hurt the cause of macro-economic stability. The constituency for economic reforms, so necessary to stimulate economic growth, would also diminish. Pressures would mount for restrictive trade practices, said Dr Singh after receiving United Nations Food and Agriculture Organizations (FAO) highest distinction, the Agricola Medal.
The Prime Minister urged the global community to join hands to control the mismatch in supply-demand.
The Wholesale Price Index (WPI) based inflation rate is at the highest in the last three years.
We are once again faced with a situation where rising demand for foodgrains and other food items is running into supply constraints both domestically as well as internationally. This is a phenomenon, I believe, that is not unique to India. Similar pressures are being felt across the world in many other countries, Dr Singh said.
He went on to say that food markets have got interlinked to oil markets, making food policy - making extremely complex as well as uncertain.
We need creative and imaginative solutions that increase agricultural productivity, that increase farm incomes, that increase food production and, at the same time, also contribute to greater purchasing power in the hands of the poor, said the Prime Minister.
In order to check inflation, the Cabinet Committee on Prices (CCP) chaired by Prime Minister Manmohan Singh had decided to abolish import duty on all crude edible oils, including palm and soya, and banned the export of non-basmati rice and pulses to contain inflation.
The Central Government also decided to raise the Minimum Export Price of basmati rice to 1,200 dollars per ton from 1100 dollars, to balance the demand ” supply in the domestic market and to cut import duty on butter and clarified butter (ghee) from 40 per cent to 30 per cent, besides, the 15 per cent import duty on maize was abolished, applicable on import of up to five lakh tons.
The CCP also advised states to impose limits on stocks of commodities under the Essential Commodities Act, besides asking steel producers not to raise prices.
The study done by a business conglomerate reveals that the Central Government’s efforts to contain inflation will come start-yielding results by August when inflation is likely to fall at of four per cent.
Experts believe that after all possible measures taken by the government, now, everyone is waiting for Reserve Bank of India’s (RBI) annual credit policy that will be revealed on April 29.
According to analysts, the announcement of Sixth Pay Commission recommendations, and provisions for enhanced expenditure on social sectors in the Budget 2008-09 coupled with rising crude oil prices have also raised expectations about high inflation. (ANI)
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