Union Finance Minister Welcomes Substantial Decline in Core Inflation; Hopeful that Recent Monetary Announcements Would Help in Addressing These Concerns

Union Finance Minister Shri Pranab Mukherjee has welcomed the substantial decline in core inflation from 9.19 per cent in March 2011 to 7.97 per cent, along with drop in inflation for food articles from 9.47 per cent in March to 8.71 per cent in April 2011. Beside it, the Finance Minister said that there is decline in year-on-year overall inflation to 8.66 per cent from 9.04 per cent in March 2011. Shri Mukherjee said that these are welcome trends. However, Shri Mukherjee said that these are not the kind of inflation figures that he is comfortable with. The Finance Minister said that there will be some impact on overall inflation due to the adjustment in the petrol prices effected by the Oil Marketing Companies in the coming months. Shri Mukherjee said that the international scenario on commodity prices also does not appear good at present. Union Finance Minister Shri Pranab Mukherjee said that we will continue to monitor the situation and take necessary measures to address the inflationary pressures in the economy.

‘No quick fix solution for lowering inflation'

Reserve Bank of India Governor D. Subbarao on Monday said it was unrealistic to expect the central bank to deliver on an inflation target in the short-term.“In an emerging economy like ours it is not practical for the central bank to focus exclusively on inflation oblivious of the larger development context. The RBI cannot escape from the difficult challenge of weighing the growth-inflation trade off in determining its monetary policy stance,” said Dr. Subbarao while addressing the meeting of Central bank governance group in Basel.

Growth could be 8 per cent during FY 12: FM

Finance Minister Pranab Mukherjee on Thursday projected India's economic growth at 8 per cent for the current fiscal, lower than the budgetary estimate of 9 per cent, due to measures taken to rein in high inflation."If oil prices continue to rise, it would be difficult to achieve higher GDP. GDP may come down to 8 per cent from (the projected) 9 per cent," Mukherjee told reporters on the sidelines of ADB annual meeting in Hanoi.The government's (India) primary concern now is to manage inflation while sustaining high growth rate.Hardening of global commodity prices, particularly oil prices has accelerated inflation, he said adding "our projection is 7.5-8 per cent inflation during the year".

Third Meeting of Inter Ministerial Group (IMG) on Inflation Held ; no Conflict Between the Objectives Of High Growth and Low Inflation in Long Run: Says RBI Governor

A meeting of the Inter-Ministerial Group (IMG) on inflation was held today under the Chairmanship of Dr Kaushik Basu, Chief Economic Advisor, Ministry of Finance. The IMG was set-up at the suggestion of the Prime Minister on 2.2.2011, “to review the inflation situation and suggest corrective measures.” Along with Dr. Kaushik Basu, Chief Economic Adviser and Chairman of the IMG, the meeting was also attended among others by Ms. Sudha Pillai, Member Secretary, Planning Commission, Shri P.K. Basu, Secretary, Department of Agriculture & Cooperation , Shri B.C. Gupta, Secretary, Department of Food &Public Distribution,  all Members of IMG.The meeting was also attended by Smt. Sushma Nath, Finance Secretary, Shri R.Gopalan, Secretary, DEA, Shri Rahul Khullar, Commerce Secretary, Shri. T. C. A. Anant, Chief Statistician and Secretary, MoSPI, Dr.Govinda Rao, NIPFP, Shri. Suman K Bery, Dr. Subir Gokarn, Dy.Governor, RBI, Shri.Yogesh Suri, Adviser, Planning Commission, Smt.S.Bhavani, Senior Economic Adviser, DEA, Dr. Dipak Dasgupta, Principal Economic Adviser, DEA and Smt. Vini Mahajan, Joint Secreatry, PMO, as special invitees. 

FM’s Intervention on ‘Managing Inflation and Capital Flows’

Finance Minister Shri Pranab Mukherjee made the following intervention on ‘Managing Inflation and Capital Flows’ at Hanoi, today“Before the onset of global crisis, we faced food and fuel price volatility. During the global crisis of 2008-09, with collapse of demand, we experienced a broad flattening of prices. And, as the world experienced recovery from the crisis, different parts of the world faced highly differentiated recovery and inflationary conditions. Till about a few months ago, the slow recovering advanced economies, with few exceptions, still faced low inflationary conditions, while fast recovering emerging economies faced higher inflation.

The right priority - Opinion

It is heartening that the Reserve Bank of India, in consultation with the Centre, has picked up enough courage to bite the bullet and take up the issue of tackling inflation as its main priority. So far, it was taking mere baby steps by way of a 25 basis point hike eight times since March 2010 to ensure that GDP growth does not falter. This time, the central bank surprised the market and a section of economic analysts by turning hawkish and raising its short-term lending (repo) rate by an unanticipated 50 basis points to 7.25 per cent and leaving the borrowing (reverse repo) rate to float lower by one percentage point at 6.25 per cent. Even as the bank rate and the cash reserve ratio have been left unchanged so as not to affect the flow of liquidity, the net effect of the annual credit policy action is that short-term funds the banks borrow from the RBI will be available at a higher rate and, as a result, housing, auto, and consumer loans will cost more to the consumer. The policy move, which will mean marginally lower GDP growth in the short term, has come as a disappointment to India Inc. owing to the negative impact on investment. But the higher-than-expected increase in key policy rates should be viewed as a chemotherapeutic dose to combat the cancer of inflationary expectations.

Food inflation up to 8.76%; RBI likely to hike rates further

Food inflation went up to 8.76 per cent for the week ended 16th April, raising fears of another hike in the key policy rates by the Reserve Bank in its annual policy to be announced next week.Amid concerns of rising inflation, RBI Governor D Subbarao is expected to hold consultations with Finance Ministry officials before firming up proposals for the annual credit policy to be announced on 3^rd May.

The inflation conundrum - Opinion

To the surprise of the UPA government, inflation just refuses to go away. Almost a year ago, when addressing a Chief Minister’s conference on food prices early in February 2010, Prime Minister Manmohan Singh declared: “The worst is over as far as food inflation is concerned. I am confident that we will soon be able to stabilise food prices.” Three months later, on more than one occasion, government spokespersons, like Chief Economic Advisor Kaushik Basu, declared that inflation had “peaked out” and was on a downward trend. Such statements are not surprising since in the current dispensation government representatives at the highest level are expected to talk down prices and talk up markets. It is not what you say but the confidence with which you say it that matters.

Inflation hurting the growth process - Continuing uncertainty about energy and commodity prices may vitiate the investment climate

Inflation is a subject for discussion in the last several months. Even though taming rising inflation and inflationary pressures are concerns of the Reserve Bank of India (RBI), inadequate fiscal measures would derail the goals of the central bank. It is for sure that the forthcoming Annual Policy 2011-12, which would be announced by the RBI in the first week of May, would seriously discuss the issue of inflation.

Black money cause of price rise: Swamy

PATNA: Janata Party president Subramanian Swamy on Sunday said black money was responsible for inflation and price rise in the country, with black-marketers using ill-gotten wealth to hoard essential commodities. “Black money is being used in a big way to purchase consumer goods, including food grains. These are hoarded to cause artificial shortage,” he said in his lecture on ‘Ramrajya Kal Aur Aaj’ here. Dr. Swamy claimed that those hoarding black money had invested up to 70 per cent of their capital in consumer goods and were using the profits to buy food materials for black marketing. This had led, he said, to the unusually high inflation rate of about 16 per cent, which was negating India’s 9 per cent growth.

Persistent inflation a cause of concern: PM

Admitting that persistent inflation, especially in the food sector, is a cause of concern, Prime Minister Manmohan Singh on Thursday emphasised on increasing the country's agricultural production to enhance food security. 

"We have to make a concerted effort to enhance our food security... Our economy has been in reasonably good shape in the past seven years. We have achieved an impressive rate of growth, which we were able to sustain even in the midst of the worst global financial crisis of recent times," he said.