Both the government and Reserve Bank have taken a number of steps to address the issue of high inflation, including the reduction of import duty on essential commodities, Parliament was informed today.
"The government is aware that inflation hurts the lower income group of society. Measures taken to contain prices of essential commodities include— import prices reduced to zero on rice, wheat pulses, edible oils (crude) and onions...," Minister of State for Finance Namo Narain Meena said in a written reply to a question in the Lok Sabha.
Among the other measures taken by the government to control inflation, he mentioned the ban on export of edible oils and pulses, suspension of futures trading in rice, urad and tur dal and extension of stock limit orders in case of pulses and rice.
Meena also said the government has reduced import duty on skimmed milk powder, petrol and diesel and customs duty on crude oil.
"As part of the monetary policy review stance, the RBI has taken suitable steps with 11 consecutive increases in policy rates and related measures to moderate demand to levels consistent with the capacity of the economy to maintain its growth without provoking price rise," he said.
Headline inflation, as measured by Wholesale Price Index (WPI), has been above the 9% mark since December, 2010, and stood at 9.22% in July this year. Food inflation stood at 9.80% in mid-August.
The government has been under attack from various quarters over sustained inflationary pressure.
In its Annual Report released yesterday, the RBI said inflation is likely to stay elevated at least till the third quarter of the current fiscal, before falling to 7% by March, 2012.
Meena said the impact of inflation is different in urban areas vis-a-vis rural areas.
"The impact of inflation on rural and urban areas differs because of the diverse consumption pattern and income distribution," the minister said without further elaboration.
He said that inflation, as measured by the Consumer Price Index (CPI) for both Rural Labourers and Industrial Workers, has fallen substantially during the last few months.
While the CPI-Rural Labourers slipped from 17.35% in January, 2010, to 9.03% in July this year, the CPI-Industrial Workers came down from 16.22% in January, 2010, to 8.62% in June, 2011.
"In response to the anti-inflationary policies of the government, CPI-RL based inflation has eased to 9.03% in July, 2011, from its peak of 17.35% in January, 2010," Meena said.
The troubles for the Indian banking system are likely to increase in the next 12 months due to slow economic growth and sluggish fiscal reforms. ...