'Monetary measures not necessary to tame food inflation'

Agriculture Minister Sharad Pawar today said monetary measures are not required to contain food inflation, amid speculations that the Reserve Bank of India (RBI) may squeeze money supply to rein in surging food prices.

"Not necessary," Pawar said when asked if monetary measures are required to rein in food inflation, which stands at over 16 per cent.

He said if supply situation improves, food prices will come down. "In fact, if the (food) availability is improved, situation (food inflation) will automatically improve."

RBI, in its monetary policy review on Friday, is expected to suck out liquidity from the system to prevent spread of inflation to manufactured items.

By sucking out excess money supply, RBI tames demand factors, which fuels expectations about future inflation.

Pawar said government's measures on sugar has cooled down prices of the sweetener.

"Fortunately, Indian industry is importing raw sugar in a big way. The government has allowed them to process anywhere in the country. That itself has resolved substantial problem."

The minister said retail sugar prices are coming down, but not in proportion to decline in wholesale prices.

"Food prices have come down ... Sugar has come down to Rs 3,500 a quintal from Rs 4,000, but still at wholesale level, we are waiting for (decline in prices at) retail level also," he said.