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FM not averse to more fiscal, monetary steps to ease inflation

Concerned over rising prices, Finance Minister Pranab Mukherjee has said more fiscal and monetary steps could be taken to ease inflation, if required.

"The Reserve Bank is constantly watching monetary expansion. To improve the supply position, import doors are kept open and as and when some steps are called for, we will be in a position to take them," he said in an interview to private news channel.

The government has taken a host of fiscal measures to maintain adequate supply including ban on export of non-basmati rice, wheat and sugar.

At the same time, imports of deficient food items like pulses and edible oil have been allowed duty free.

In order to control high inflation, RBI in its monetary review on 27th July raised short-term borrowing (reverse repo) rate by 50 basis points and lending (repo) rate by 25 basis points.

It, however, kept cash reserve ratio, a requirement for banks to keep portion of their deposits with the central bank in cash, unchanged due to difficult liquidity position in the markets.

For the month ended June, wholesale price-based inflation stood at 10.55 per cent.

At the same time, food inflation eased to 9.53 per cent due to cheaper prices of vegetables, fruits and sea fish.

The Prime Minister has projected inflation to fall to 6 per cent by this year-end, while most policy makers pegged it at 6-6.5 per cent by this fiscal-end.

"It is not a question of passing on blame to any body (for price rise). It is a question of how to build up the closer cooperation between the Centre and states because monetary policy is in the domain of the Union government," he said.

Last week, the Finance Minister said in Parliament that states are also responsible for price rise.

"They have (powers under) the Essential Commodities Act ... take hoarding and de-hoarding operations. ESMA (Essential Services Maintenance Act) is with states...I will not pass on the buck to them alone," Mukherjee had said.

Similarly, he said, to improve the availability of the material which are in short supply is also the responsibility of the Union Government.

"What I emphasise on is that there is closer cooperation between the states and the Centre to ensure that we can take collective steps to ensure that sufferings of the people are mitigated to the extent it is possible," he said.

 



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