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New Delhi May 4 The Union Finance Minister, Mr P. Chidambaram, said on Friday that the fiscal and monetary steps taken by the Government and the RBI were having a dampening effect on inflation. The demand and credit growth were moderating, he said in the Lok Sabha.

Asserting that inflation was being spurred by a combination of rising demand and supply constraints, he said a two-pronged strategy has been adopted to tackle inflation in the short and long term.

Measures taken

While the Government has taken a slew of measures such as cutting excise and customs duties on various commodities to ease the situation immediately, the RBI has taken monetary policy initiatives, which could take some time to have an impact, he said.

On correcting the supply-demand mismatch of essential goods, he said supply can be augmented either by way of increased procurement within the domestic market or through imports.

The production of wheat, paddy and pulses in the country needs to be increased, Mr Chidambaram said.

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