Price pressures to ease with monsoon: Gokarn
08 Jun 2010
Price pressures in India are exected start easing with a normal monsoon season but the Reserve Bank will continue to further tighten monetary policy, deputy governor of RBI, Subir Gokarn said Tuesday.
He added the government may delay reducing fuel subsidies for the foreseeable future in a bid to avoid hurting consumers who are already suffering from high food prices.
Gokarn told reporters on the sidelines of a Nomura investment conference in Singapore that from a political and welfare perspective, it was difficult to impose on people a hike in fuel prices at the time when they were already dealing with high food prices. He added that balancing the two factors would drive the timing.
Yesterday, the government decided to defer decision on raising fuel prices till next week. This is the second time in a year the government has failed to muster the political will to tackle the sensitive issue that could help cut the budget deficit.
India's food price index was up 16.55 per cent in the year to May 22 faster than the previous week's annual rise of 16.23 per cent, according to whole price data released last Thursday.
The fuel price index rose 14.14 per cent after it gained 12.08 per cent in the previous week.