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Updated: January 27, 2010 17:49 IST

Monetary measures not necessary to tame food inflation, says Pawar

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Union Agriculture Minister Sharad Pawar.
The Hindu
Union Agriculture Minister Sharad Pawar.

Agriculture Minister Sharad Pawar on Wednesday said monetary measures were not required to contain food inflation, amid speculations that the Reserve Bank may squeeze money supply to rein in surging food prices.

“Not necessary,” Mr. Pawar said when asked if monetary measures were required to rein in food inflation, which stands at over 16 per cent.

He said that if supply situation improved, food prices would come down. “In fact, if the (food) availability is improved, situation (food inflation) will automatically improve.”

RBI in its monetary policy review on Friday is expected to draw out liquidity from the system to prevent spread of inflation to manufactured items.

By drawing out excess money supply, RBI tames demand factors, which fuels expectations about future inflation.

Mr. Pawar said government’s measures on sugar have cooled down prices of the sweetener. “Fortunately, Indian industry is importing raw sugar in a big way. The government has allowed them to process anywhere in the country. That itself has resolved substantial problem.”

The Minister said retail sugar prices are coming down, but not in proportion to the decline in wholesale prices. “Food prices have come down ...sugar has come down to Rs 3,500 a quintal from Rs 4,000, but still at wholesale level, we are waiting (decline in prices),” he said.

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