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Updated: August 5, 2011 00:37 IST

Our efforts brought inflation down: Pranab

J. Balaji
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Finance Minister Pranab Mukherjee at the Parliament House. File photo: R.V. Moorthy
The Hindu
Finance Minister Pranab Mukherjee at the Parliament House. File photo: R.V. Moorthy

The benchmark of inflation must be around 5 per cent

Finance Minister Pranab Mukherjee on Thursday lambasted the Opposition for alleging that the UPA-II regime was “insensitive and doing nothing” on the spiralling prices of commodities and increasing food inflation percentage.

Only because of the government's efforts, inflation, which was 22 per cent in February, 2010, came down to 8.35 per cent now and he wished that the benchmark of inflation should be around 5 per cent.

It was not true that the government was not acting or taking appropriate actions to check rising prices and inflation, he said.

Replying to the debate in the Lok Sabha on the motion on the price rise and inflation, Mr. Mukherjee said higher growth rate would not lead to inflation as alleged by the Opposition. Inflation was the result of mismatch between demand and supply. During September, 1974, the inflation touched 24 per cent though the growth rate then was low, he said to buttress his point. “We want growth at the same time with moderate inflation.” Even during the Janata regime, inflation touched 21 per cent in January 1980. The present government was trying to work out some mechanism with which growth could be achieved and at the same time inflation was brought down. “These are difficult times... but that does not mean that we should start eating rats.”

Mr. Mukherjee refused to accept the theory of Yashwant Sinha (BJP) that low inflation would help bolster growth. “There is no inherent contradiction in growth and inflation.”

He added that external factors attributed to the increasing prices of some commodities. He listed out various steps taken by the government to help the poor and people below the poverty line, such as providing subsidised rice, wheat, employment through the MNREGA and stimulus package for the industries, in view of the global meltdown. These all were measures taken by the government to ensure that the lowest strata of society did not suffer due to inflation.

On the increasing prices of petrol, diesel, LPG and kerosene in the present regime, he said it had to be kept in mind that India managed 75 per cent of its crude oil requirement by imports and the present price of crude oil in the international market was $117 per barrel. The price, which was $16 per barrel in 1991 went up to $18 in 1996, $12.23 in 1998, $36 in 2004 when the UPA-I regime assumed office. Even after the recent increase in the prices of diesel, petrol and LPG, the under recovery of oil companies worked out to Rs. 1,22,000 crore

Responding to the demand for removing the subsidy on diesel used by passenger cars, the Minister said: “We can accept the suggestion and try to work out what mechanism could be found out so that this section (passenger cars owners) are not subsidised.” Out of the total diesel availability, 10 per cent was used by the industries, 6 per cent by the railways, 12 per cent by agriculture, 8 per cent by power generation units, 12 per cent by buses, 37 per cent by trucks and 15 per cent by passenger cars, he said.

During his nearly hour-long speech, Mr. Mukherjee also took a dig at civil society (read Anna Hazare) for compelling the government to include the Prime Minister post in the Lokpal Bill, and wondered whether they really represented civil society. He made it clear that there was no question of diluting the power of Parliament in making the legislation. “I agree with you that the decision is to be taken by you (MPs) and not by the executive or others,” he said.

The House later adopted the motion expressing concern on the increasing prices and asking the government to check inflation by voice vote.

Keywords: inflationprice rise

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