Tamil Nadu

“Good rabi harvest may bring down food prices”

C. Rangarajan Chairman, Economic Advisory Council to Prime Minister (centre), and G. Thiruvasagam, Vice-Chancellor, University of Madras, releasing a souvenir at a conference in Chennai on Tuesday.

C. Rangarajan Chairman, Economic Advisory Council to Prime Minister (centre), and G. Thiruvasagam, Vice-Chancellor, University of Madras, releasing a souvenir at a conference in Chennai on Tuesday.  

While the rise in prices of food products is “troubling,” a good rabi harvest is expected to bring down prices in the next few weeks, said C. Rangarajan, chairman, Economic Advisory Council to the Prime Minister, on Tuesday.

Dr. Rangarajan said the outlook on rabi arrivals [starting April] was good and that would ease some concerns of consumers even as the inflation rate closed in on double-digit figures.

Delivering the inaugural address at an international conference on “Global Financial System in the post-crisis era: Issues, Opportunities and Challenges” at the University of Madras, Dr. Rangarajan added that the government would have to wait a few weeks before deciding on a rollback of fiscal stimulus measures.

He said the revised estimates for the fiscal deficit in 2009-2010 showed it at 6.7 per cent of the GDP. This was unsustainable and the Union budget of 2010-2011 had brought the deficit down to 5.5 per cent. He commended the Union budget for striking a “proper balance between the need for fiscal consolidation and the need to provide adequate stimulus for growth.”

The government had responded well in tackling the need for stimulation following the financial crisis, but reforms in the regulatory framework were required for the long term, Dr. Rangarajan said.

Ruling out an abandonment of “financial innovations” including derivatives, which he said were satisfying a felt need of customers, he said the regulatory measures were needed to discourage excessive risk-taking and leveraging by banks.

“Too little regulation may encourage financial instability but too much of it can impede financial innovations which are badly needed,” he said.

M.S. Sundara Rajan, chairman and managing director, Indian Bank, said the financial crisis had provided India an opportunity to position itself as an attractive destination for global capital. But issues including the ballooning fiscal deficit, transparency, governance norms and an adequate method for the measurement and management of fiscal risk needed to be sorted out, he said.

G. Thiruvasagam, vice-chancellor, University of Madras, said it was time to think about rehabilitative and preventive measures to protect the Indian economy.

The two-day conference is being organised by the Department of Commerce of the Madras University and is supported by the University Grants Commission (UGC) and the Indian Bank.

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Printable version | Feb 19, 2020 6:16:55 PM | https://www.thehindu.com/news/national/tamil-nadu/ldquoGood-rabi-harvest-may-bring-down-food-pricesrdquo/article16569381.ece

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