Pranab not averse to more fiscal, monetary steps to ease inflation

Concerned over rising prices, Finance Minister Pranab Mukherjee has said more fiscal and monetary steps could be taken to ease inflation, if required.

“The Reserve Bank of India (RBI) is constantly watching monetary expansion. To improve the supply position, import doors are kept open and as and when some steps are called for, we will be in a position to take them,” he said in an interview to news channel CNBC TV18.

The government has taken a host of fiscal measures to maintain adequate supply including ban on export of non-basmati rice, wheat and sugar. At the same time, imports of deficient food items like pulses and edible oil have been allowed duty-free. In order to control high inflation, RBI, in its monetary review on July 27, raised short-term borrowing (reverse repo) rate by 50 basis points and lending (repo) rate by 25 basis points. It, however, kept the cash reserve ratio, a requirement for banks to keep a portion of their deposits with the central bank in cash, unchanged due to the difficult liquidity position in the markets.

For the month ended June, wholesale price-based inflation stood at 10.55 per cent. At the same time, food inflation eased to 9.53 per cent due to cheaper prices of vegetables, fruits and sea fish.

The Prime Minister has projected inflation to fall to 6 per cent by the end of this year, while most policy makers pegged it at 6-6.5 per cent by this financial year-end.

“It is not a question of passing on blame to anybody (for price rise). It is a question of how to build up the closer cooperation between the Centre and states because monetary policy is in the domain of the Union government,” he said.