New Delhi, April 18
Without promising the nation an overnight miracle, finance minister P. Chidambaram today expressed cautious optimism about a further decline in inflation. At the same time, he warned that the pressure on the economy would continue till international prices decline.
Chidambaram made this circumspect observation after attending a function held at the Prime Minister’s residence this evening, to release a commemorative coin on the 150th anniversary of the First War of Indian Independence in 1857.
Asked if inflation would dip further, Chidambaram replied: “We can take steps to control domestic prices. We should be able to moderate inflation but we have to be patient. Don’t jump to conclusions. Do not expect miracles. It will take some time. Let us not lose nerve.”
The finance minister explained that the price rise is dictated by rise in international prices of items, which India imports. “We are a major importing country. We are importing crude oil, urea, palm oil, other fertilisers, palm oil, pulses and other metals. International prices of these items have either doubled or tripled in the last seven months.”
Quoting the present price of crude oil, which stands at $115 a barrel, the finance minister asked, “Is there anything I can do about urea, palm oil? Unless international prices decline, we will be under pressure.”
On the Reserve Bank of India hiking the CRR for banks to suck out money from the system, Chidambaram said, “The RBI consulted the ministry and announced the CRR. This will take away Rs 18,000 crore of liquidity. There will be less liquidity. It will moderate the demand and have a moderating effect on prices. Still, don’t expect miracles.”
The FM chose to cling to the government’s previous line of defence despite severe criticism
by the Left. Initiating a short duration discussion on the situation arising out of continuous rise in prices of essential commodities, CPI leader Gurudas Dasgupta said the Prime Minister was making an “unintelligent effort to hide behind the cover of global price rise.”
By asking the citizens not to expect a miracle, Chidambaram seems to have lost sight of the Left’s severe criticism of his Cabinet colleague Kapil Sibal’s recent remark that the government does not have a magic wand to control inflation. Dubbing Sibal’s remarks as “senile sarcasm on part of the government, the CPI leader said he expects the science and technology minister to do a scientific analysis of the price rise.
“Let us hope so,” is all that the economist PM said on being asked if inflation would ease further. Inflation declined to 7.14 per cent in the first week of the current fiscal, giving some respite to the government. The government, which is facing unsparing attack on the price rise issue from its indispensable Left partners, has reason to heave a sigh of relief as inflation cooled down a little. The annual rate of inflation eased to 7.14 per cent for the week ended April 5 from the previous week’s forty month high of 7.41 per cent.
