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Updated: August 6, 2010 00:52 IST

Our steps curtailed food inflation: Pranab

Special Correspondent
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TV grab shows Finance Minister Pranab Mukherjee speaking in the Rajya Sabha during the ongoing monsoon session in Parliament in New Delhi on Thursday. Prime Minister Manmohan Singh is also seen.
PTI TV grab shows Finance Minister Pranab Mukherjee speaking in the Rajya Sabha during the ongoing monsoon session in Parliament in New Delhi on Thursday. Prime Minister Manmohan Singh is also seen.

Finance Minister Pranab Mukherjee on Thursday countered the Opposition attack that the government's policies resulted in price rise and said the steps it took resulted in food inflation coming down.

Replying to the debate on the motion on price rise, he said additional revenue measures were also taken to bring down the fiscal deficit and keep the economy in a better shape.

Elders adopt motion

The Rajya Sabha later unanimously adopted the motion: “This House takes a considered view of inflation and urges the government to take further effective action to contain its [inflation] impact on common man.” The Lok Sabha adopted a similar motion on Wednesday.

Recalling the economic situation since the advent of the global crisis in 2008 and its effect on economies including India, Mr. Mukherjee said countries decided to inject a stimulus package as part of fiscal expansion, with India spending Rs. 18,60,000 crore or nearly three per cent of the GDP (Gross Domestic Product) which led to inflationary pressures. The problem was compounded by volatility in the energy sector with petroleum prices touching $ 142 a barrel in June 2008.

Besides, there was an impact on the prices of food items with kharif production falling by 15 million tonnes. The country faced a perpetual shortage of five per cent of the pulses requirement and 15 per cent of edible oils. Attempts to bridge the gap with imports did not yield the desired benefits.

PDS woes

The government's effort was to insulate the poor and vulnerable sections from the effects of high prices by providing foodgrains through the public distribution system. But unfortunately it did not happen in the absence of a proper PDS.

Mr. Mukherjee, however, ruled out the possibility of a universal PDS, stating that even in the present targeted system, States were unable to ensure proper delivery. They should decentralise the system to the panchayat level. The Centre was awaiting the report of the Standing Committee of Chief Ministers on the issue.

In this context, he said, the country required a collective concept of cooperative federalism so that effective delivery systems were put on the ground.

Praising the National Democratic Alliance government for doing away with the administrative price mechanism for oil, he said it resulted in a boom in investment in the sector.

As for the hike in the prices of petroleum products, he said that while there was a revenue angle the move was also aimed at bridging the revenue deficit and keeping the economy healthy.

Recalling the 1990 instance of the country pledging gold for a loan, Mr. Mukherjee said he would not like any Finance Minister facing such a situation or being made to wait by his counterpart in another country.

Appealing to all sections of the House to discuss with their States the Goods and Services Tax, Mr. Mukherjee allayed the fears that the Centre would usurp their powers through a veto provision, stating he did not wish to be a “Super Finance Minister.”

Concerns remain: Jaitley

Winding up the debate on the motion he initiated, Leader of the Opposition Arun Jaitley said the Minister's reply addressed neither the concerns nor the disappointment of the Opposition.

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