“More steps to rein in prices”
NEW DELHI: Inflation surged to a new 45-month high at 8.24 per cent for the week ended May 24, from 8.10 per cent the previous week, despite a drop in the prices of essential food items such as fruits and vegetables.
Concerned at the unabated rise in the prices — more so as the recent increase in the prices of petroleum products is expected to fuel a fresh bout of cascading hikes — Finance Minister P. Chidambaram on Friday conceded that “inflation is a problem” and sought the people’s support to hold the price line even while hinting at fresh concerted measures to tackle the situation.
Even as he explained the major reasons for the current bout of runaway inflation, Mr. Chidambaram, in a statement, launched a blistering counter-attack on the BJP’s National Executive resolution which criticised the government’s handing of the price situation.
“I would be the first to admit that we have not overcome all our problems. Notwithstanding the many successes under the UPA government, we admit that inflation is a problem. It was a problem under the BJP/NDA government too.”
Asserting that the government would not fight shy of taking more steps, Mr. Chidambaram said: “We have taken fiscal, monetary and administrative measures, and we are willing to take more measures. But to criticise the government on the ground of inflation without going into the causes of the current inflationary trends and without offering any concrete solutions would amount to merely politicising the issue.”
In a concerted step, the Reserve Bank of India (RBI) also announced that inflation would be checked through adequate measures.
“We are vigilant and ready to take all measures to curb inflationary expectations,” RBI Governor Y.V. Reddy said, giving rise to speculation that the central bank would hike the banks’ mandatory cash reserve requirements or short-term inter-bank rates.
The government’s immediate concern is to hold the price line but that now appears remote as the hike in fuel and LPG prices is expected to further push up the prices which would be reflected in the WPI data pertaining to June 5 and released two weeks thereafter.