Govt says reviewing high inflation situation constantly

The government today said it is constantly reviewing the situation of high inflation and has taken both fiscal and administrative measures to cool it down.

"The government is seized of the matter and has taken both fiscal and administrative measures to moderate price rise," Minister of State for Finance Namo Narain Meena told the Rajya Sabha in a written reply.

Steps taken by the government include cutting import duties on rice, wheat, pulses, edible oils, maize, butter and ghee to zero, allowing import of raw sugar at zero duty up to 2010 end, banning export of non-basmati rice, suspension of futures trade in rice, urad, and tur etc, he said.

Several of anti-inflationary measures will continue during 2010-11, Finance Minister Pranab Mukherjee said in reply to another query in the house.

He said as a result of these measures, inflation in overall cereals and pulses have declined from 14.77 per cent and 47.82 per cent, respectively on January 2, 2010 to 12.20 per cent and 38.04 per cent respectively on February 6, 2010.

Meena said the Finance Minister had requested the states at a meeting in January to cooperate to address problems relating to distribution of food items by lifting surplus stocks allotted to them.

Against an allocation of 10 lakh tonnes of rice to the states and Union Territories for distribution to retail consumers, the lifting as on February 18 was just 4.3 lakh tonnes, Meena said.

Similarly, against an allocation of 20 lakh tonnes of wheat, the lifting as on the same date was 3.1 lakh tonnes, he added.

Meena said the rise in prices is due to a number of factors like hike in minimum support prices, adverse weather and climate change, increase in crude oil prices and hardening of international prices in some cases.

Market expectations and sentiments following drought conditions also played a major role in price rise, he added.

He said wholesale price based inflation in January 2010 stood at 8.56 per cent. RBI projects inflation to be 8.5 per cent by this fiscal end.