Fm Rejects Manmohan Call To Tighten Money Supply

Finance Minister P Chidambaram last week told his United Front colleagues he wanted to bring down the interest rates even further. He said he did not agree with former finance minister Manmohan Singh's view there was a need to place curbs on money supply.

The finance minister told a senior UF leader the budget would be presented on February 28 and the Parliament session would commence on February 20.

According to a United Front steering committee member, the finance minister said Singh had recently met him and expressed his view there was a need to tighten money supply, as the current trend would lead to inflation shooting up.

 

Chidambaram feels inflation at a little over seven per cent was quite manageable. He said the ninth plan growth target was modest and achievable. With enough funds available for investment and growth, industrial production would be buoyant.

When a Left leader pointed out there were complaints of the economy not doing well, the finance minister asked "Who is complaining?" Industry, which was reeling under a liquidity problem and high interest rates, has seen interest rates going down by two percentage points. It was at this point, the finance minister said he planned to bring down the rates by one percentage point.

Political expediency, however, demanded the Congress regime's economic burden should not be transferred on to the people by the United Front's hands, especially at a time when prices of essentials are skyrocketing.

The Left, which has been criticising the successive governments at the Centre for raising administered prices before the session, have made it clear Parliament must be taken into confidence on such price increases. They have ruled out a repeat of last time when the government had increased prices of petroleum products before the 1996 budget.