Govt of the day pays the price for high inflation: Chidambaram

Apparently admitting that price rise was one of the reasons for Congress defeat in recent elections, Finance Minister P Chidambaram today said it was common knowledge that the government of the day pays the price for persistently high inflation.

However, he ruled out lowering of support prices for farm produce or rural wages under the UPA's flagship MNREGA to contain inflation, saying such logic is a "specious argument" that ignores the needs of the poor.

"It is common knowledge that the government of the day will pay a price for high inflation, especially if inflation persists over a long period of time," Chidambaram said in his inaugural address at the Delhi Economic Conclave here.

Congress President Sonia Gandhi had also referred to price rise as one of the factors for the defeat in the assembly polls.

While asserting that containing inflation was a priority of the government, Chidambaram said there is also a need to deal wisely with harvesting and marketing and deal strictly with hoarding and profiteering.

"Laws (Agricultural Produce Markets Act and the Essential Commodities Act) in this behalf are entirely in the domain of the state government. The powers of notification and enforcement under these Acts are with the state governments, yet state governments are loathe to take action under these Acts.

"I think it is necessary to highlight the inaction of the state governments in this behalf, even while accepting that the central government must do all it can, within its powers, to moderate inflation," he said.

The government had to face tough situation on account of high inflation, especially onion prices which touched a high of Rs 100 a kilo.