New Delhi: Finance minister P Chidambaram said the
government would take action in a "measured"
way, both on the fiscal and the monetary fronts, to check
inflation. He, however, warned manufacturers against pushing
up commodity prices.
Reserve Bank of India (RBI) governor YV Reddy called on
Chidambaram yesterday morningfor an hour-long discussion
on the monetary measures that could be considered to rein
in the rising prices. The minister also had a detailed
meeting with prime minister Manmohan Singh on the ministry''s
plan of action.
prime minister''s office had directed the finance ministry
to prepare a detailed note on the rising inflation and
its outlook, to be discussed in the Cabinet Committee
on Economic Affairs meeting.
reporters after the meeting , Chidambaram said the RBI
would take action according to its judgment on the monetary
side and the finance ministry would take the necessary
manufacturers are pushing up prices taking advantage of
the worldwide increase in commodity prices. I will advise
them not to increase the prices. There is no justification
whatsoever," Chidambaram said.
said there was no reason for people to entertain inflationary
expectations. "Monsoon has revived and seasonal factors
will be ironed out. So, do not pay high prices if you
feel the prices are high," the minister said. Besides
statistical reasons, the rise in inflation was largely
because of an increase in the prices of petroleum, Chidambaram
to officials, the fiscal options being considered include
a cut in Customs duty in specific commodities like edible
oils, sugar, iron ore, steel and petroleum products, which
have contributed to the rise in the wholesale price index
officials said a cut in the customs duty was favoured
since it could be revenue neutral. "Higher imports
could make up for the loss in revenue due to a duty cut,"
an official said.
the option to cut excise duty was also considered, it
did not find favour with the revenue department.
the monetary front, the RBI could consider allowing the
appreciate, the officials said. RBI deputy governor Rakesh
Mohan discussed various monetary measures with chief economic
adviser Ashok Lahiri.