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The Finance Minister, Mr Pranab Mukherjee, on Tuesday asked the recently constituted inter-ministerial group (IMG) on inflation to review the present system of monitoring wholesale and retail prices of essential commodities.
The IMG should come up with “concrete implementable suggestions” to help tackle the inflation situation, Mr Mukherjee said in his address at the first meeting of the IMG here today.
There is a need to improve the manner in which available information is put to use in designing and formulating the required policy responses. In that context, perhaps there is a case for establishing standard operation procedures for addressing both sudden and anticipated price fluctuations, Mr Mukherjee said.
The Prime Minister, Dr Manmohan Singh, had set up the IMG under the Chairmanship of Dr Kaushik Basu, Chief Economic Advisor to the Finance Ministry, to review the overall inflation situation and suggest corrective measures.
Stating that food inflation has been unexpectedly high in recent weeks — driven by surging prices of vegetables, fruits, dairy, oilseeds and spices, Mr Mukherjee said that it was extremely important that “we are able to stabilise food prices at a reasonable level”. Wholesale price index (WPI) inflation has been relatively stable for cereals (wheat, rice) and pulses, he added.
The Finance Minister also underscored the need to have a good market intelligence system and a robust and timely data on prices.
This is vital in order to fully understand and respond to the inflation dynamics, Mr Mukherjee said. He highlighted that inflation has re-emerged as a major concern in the past few months, particularly in emerging economies.
“For us in India, the major pressure at present is emanating from prices of food and energy sectors. The risk of its spilling into the core sector requires constant monitoring, timely and proactive response,” he said.
New series of wpi
The Finance Minister also said the introduction of new series of WPI with 2004-05 as base year would address some of the concerns. Similarly, the initiative on compilation of CPI urban, CPI rural and CPI combined for all States/UTs and at the national level by covering all sections of the urban and rural population is also an important step in improving inflation management in the country.
“These indices would reflect a more accurate picture of price behaviour of various goods and services consumed by the people,” Mr Mukherjee noted.
The first meeting of IMG on inflation was also attended by Dr T.C.A. Anant, Chief Statistician of India, Dr Subir Gokaran, RBI Deputy Governor, Mr Dhanendra Kumar, Chairman of Competition Commission of India and Mr R Gopalan, Secretary in Department of Economic Affairs.
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