PC sows hope on new harvest

NEW DELHI: The government on Thursday said it will take steps to contain rise in inflation. The Cabinet Committee on Prices (CCP) chaired by Prime Minister Manmohan Singh reviewed the situation here on Thursday and urged all departments to accord priority to inflation control. The current rise in inflation is temporary and will soon moderate with the easing of supply-side situation, finance minister P Chidambaram said after the meeting.

He said the government would take every step possible on fiscal, monetary and supply management front to contain inflation. “We will take every step possible to moderate inflation. The present spurt in prices is due to a demand-supply mismatch and the rise in prices of certain commodities in the international market. Once the new wheat crop comes in, the supply-side situation should improve,” he said.

The government had cut retail prices of petrol and diesel to help rein-in prices. It also reduced import duties on several items recently, and RBI has raised repo rates and the percentage of total deposits banks have to keep with it to curb credit growth.

To further moderate inflation, the government may further cut duties in the forthcoming Budget. Briefing mediapersons here, Mr Chidambaram said CCP was briefed by agriculture minister Sharad Pawar about the arrival of new crop of essential commodities including fruit, vegetables, wheat and pulses.

Asked if the government would ban futures trading in essential commodities, Mr Chidambaram said the Parliamentary Standing Committee had submitted its report that was being examined by the agriculture ministry. “Agriculture ministry will take a final view and bring it to Cabinet or CCEA,” he said.

He pointed out that inflation touching 6.73% last week was mainly a result of supply constraints and rise in commodity prices internationally. The finance minister expressed confidence that the government would be able to moderate inflation. Asked about the growth in prices of items such as cement, he said there was a demand and supply mismatch. Companies were operating at full capacities to meet the growing demand, he added.