New Delhi, June 21
Embarrassed at delivering double-digit inflation instead of double-digit growth, it was all about damage control for the UPA government today.
There was hectic activity in the government with the finance minister P. Chidambaram holding meetings with the UPA chairperson Sonia Gandhi and the Prime Minister Manmohan Singh over various measures he plans to take to curb inflation.
The day also saw RBI Governor Y.V. Reddy meeting the PM and apprising him about the series of monetary measures that he plans to take in the coming months to curb the galloping inflation.
Besides, Sonia Gandhi also met the Chief Ministers of Congress-ruled poll-bound states - Haryana and Delhi. Bhupinder Singh Hooda and Sheila Dikshit apprised the UPA chairperson of the measures that their governments are taking to streamline the public distribution system and check hoardings of essential commodities.
While briefing the press, finance secretary D Subbarao said the RBI will take monetary measures to help curb inflation, which has soared to a 13-year high of 11.05 per cent.
Albeit the finance secretary did not speak of the monetary measures that RBI is planning to take, he said inflationary pressure is likely to continue for the next few months because of the base effect.
“We should not panic and take steps to quell inflationary expectations. That is precisely the course that the government has adopted in the past and will adopt in future,” said Subbarao. He said the momentum of inflation is slowing and the food situation is comfortable. Manufacturing inflation is also modest, he added.
In a statement circulated to the
media, finance minister P. Chidambaram said he had met the PM last night even as political parties, including the Left allies, blamed the government for mismanagement of prices.
Taking recourse to external factors once again, the FM said there is little control over global uncertainties as prices of crude oil depends on global factors such as decision of OPEC (Organisation of Petroleum Exporting Countries) to enhance oil supply.
The FM’s statement read: “I am happy to take note of the sober and reasonable advice given by Shri Yashwant Sinha, a prominent leader of the principal opposition party. He has suggested that government could have gone for deeper cuts in taxes. I have no quarrel with the proposition. After the budget estimates were presented to Parliament, we have cut taxes and sacrificed considerable revenue. Only recently, we gave up revenues of Rs 22,000 crore. I may point out that giving up revenues and borrowing an equivalent amount in the market in order to finance expenditure would also be inflationary. Nevertheless, I take Sinha’s suggestion on board and will explore the options.” The statement adds that the government will take appropriate measures to contain and moderate inflation.
