The Hindu : 'Rise in inflation no cause for alarm'

Online edition of India's National Newspaper
Friday, May 09, 2003

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'Rise in inflation no cause for alarm'

By Our Special Correspondent

NEW DELHI MAY 8. The Union Finance Ministry is "concerned and watchful" over the increasing rate of inflation, but assures that there is no reason for alarm especially in the light of prospects of a normal monsoon this year.

The Finance Minister, Jaswant Singh, said the macro-economic situation remained comfortable during 2002-3 and the adverse impact of the Iraq war was likely to get neutralised further by a normal monsoon.

Addressing the parliamentary consultative committee, he said the major contributing factors to the rise in the inflation rate were rise in oil prices due to the Gulf war, drought effect on edible oils and better prices in the manufacturing sector.

On the impact of the Gulf war on growth and inflation, he told members that the macro-economic situation in the last fiscal remained comfortable despite the drought, uncertainty on the external front and delayed global recovery.

The Finance Ministry had conducted a study in September last to assess the likely consequences of the Gulf war. In this context, he said the impact of the war was already on the reverse gear with global oil prices falling to $35 a barrel and six months futures in crude oil touching $22 a barrel.

On the restructuring of Iraq, he said India had a role to play in that country which now offered new opportunities for Indian companies.

He pointed to the strong historical bonds with Iraq. He felt the system needed to move in pace with developments and facilitate Indian companies in carrying out their projects in Iraq.

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