The Hindu Business Line : Anti-inflationary steps — 4 more commodities under scanner

AFTER duty cuts on petro-products and steel and the 50-basis-point hike in the cash reserve ratio stipulation for banks, the Government has now brought four more commodities under its anti-inflationary scanner: polymers, sugar, edible oils and furnace oil.

"We have been analysing the price behaviour of these four products and we will decide accordingly whether any corrective measures are to be taken," a top Finance Ministry official said.

As a first step, he said the Government has already allowed duty-free imports of raw sugar under the advance licence scheme, with mills being given the flexibility to sell the white sugar processed from the imported raw sugar in the domestic market. At the same time, mills will have to fulfil the obligation to export white sugar within 24 months of importing the raw sugar, which they can do by processing domestic sugarcane.

"There is no dilution of the export obligations. All that we are doing is not to insist on a grain-to-grain link, which requires the same input to be physically incorporated in the export product," the official said. With regard to edible oils, the official said no decision has yet been taken to bring down the tariff values that form the base price on which import duty is currently computed.

`Steps won't stifle growth': Meanwhile, speaking to newspersons here on Monday, the Finance Minister, Mr P. Chidambaram, maintained that the anti-inflationary measures are not intended to stifle growth. He denied that the Reserve Bank of India's move to hike the cash reserve ratio would derail the present buoyancy in industrial activity, particularly in the context of the Index of Industrial Production registering a 7.9 per cent year-on-year jump in July.

"The current inflationary pressures are due to two factors: excess liquidity in the system and increase in global oil prices. The RBI has been conscious of this excess liquidity situation and it has accordingly taken some measures to suck in this liquidity and it may take more of them," Mr Chidambaram said.

According to him, despite all this, there is still enough liquidity.

As regards oil prices, Mr Chidambaram said an indication of the extent of hike in international prices can be gauged from the fact that the country's petroleum imports had gone up by 50.88 per cent in value terms during April-July 2004, compared to a 10.69 per cent growth in the same period last year.

But in quantity terms, the growth rate this year has actually been lower, at 7.72 per cent, as against 9.36 per cent for April-July 2003.