The Hindu Business Line : Headline inflation under control: Chidambaram

The Finance Minister, Mr P. Chidambaram, on Friday said that the recent anti-inflation steps have checked the prices of wheat, pulses and sugar and that he expected further moderation in prices of wheat and sugar in the coming weeks.

"Wheat, pulses and sugar had shown increases in prices. From June 13 to today, the prices have been stable. The steps taken are having impact. Once sugar comes from the new crop and wheat imports also come in, there will be further moderation of prices," Mr Chidambaram told Lok Sabha in his reply to the debate on supplementary demands for grants for 2006-07.

Later, the Lok Sabha passed the supplementary demands for grants authorising additional expenditure of Rs 47,868.97 crore. Of this, the proposals involving net cash outgo aggregated Rs 8,667.95 crore.

In his reply, Mr Chidambaram also asserted that the headline inflation in the economy was under control.

He highlighted that the Government data released today showed that wholesale price index for the week ended July 29 increased 4.61 per cent year-on-year, lower than the 4.67 per cent for the previous week.

"Given the market conditions and the brisk pace of economic growth, it is perhaps little optimistic to expect that headline inflation will not be above 4.5 per cent," he said.

Measures taken

In June, the Government had taken a number of measures to improve the supply of sugar, wheat and pulses in the domestic market and thereby check the price rise in these essential commodities. The measures include reduction in customs duties on certain wheat imports and placing a ban on export of sugar and pulses.

Subsidies to stay

Meanwhile, the Finance Minister on Friday asserted there was no question of withdrawing any of the subsidies on food and fertilisers. "If there is anything that needs subsidies, it is food and fertilisers," he said.

The outgo on fertiliser subsidy so far during 2006-07 has been to the tune of Rs 17,385 crore. In addition to this outgo, the Government had made a supplementary demand for grant (for 2006-07) of Rs 1,500 crore as subsidy for imported fertilisers.