Economy

Retail inflation has become ‘sticky’: Chidambaram

| Updated on: Dec 14, 2012
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Finance Minister P. Chidambaram has indicated some more steps for reviving the economy in the next few weeks.

Finance Minister P. Chidambaram admitted on Friday that while wholesale prices have shown some moderation, retail inflation had turned ‘sticky’.

Coming just ahead of next week’s mid-quarter review of monetary policy, the Finance Minister’s statement assumes significance as there is a chance the Reserve Bank of India may now trim key policy rates to spur growth.

Growth measures

“While headline inflation has moderated to 7.5 per cent, inflation measured by the consumer price index remains sticky at 9.9 per cent. There is no reason at all to become complacent,” Chidambaram said, while inaugurating the Delhi Economic Conclave on Friday. Headline inflation as measured by the wholesale price index (WPI) moderated further to 7.24 per cent for November.

The RBI’s mid-quarter review of monetary policy is slated for December 18. While the Government, along with corporates, has been pushing hard for a rate cut, the central bank, citing high inflation, has not revised rates since April 17. However, Chidambaram promised more steps to revive the economy and boost sentiment.

“India weathered the crisis very well in 2008 and I am confident that the steps we have taken and some more steps that we will take in the next few weeks, will help turn the economy around,” the Finance Minister said.

On Thursday, the Cabinet approved the formation of a Cabinet Committee on Investment, the new Land Acquisition Bill and a new Investment Policy for Urea besides cutting the base price for spectrum. The Government is also pushing for the passage of the banking, insurance and pension Bills in Parliament.

Earlier, it opened up the multi brand retail sector for foreign direct investment while liberalising FDI norms for aviation and power exchanges.

However, the Minister showed cautious optimism when he said: “It is too early to say whether the measures have begun to bear fruit, although it is our expectation that they will do so.”

Giving an indication about the soon-to-be announced decisions on Retrospective Tax and the General Anti-Avoidance Rules (GAAR), Chidambaram said: “We are also addressing some tax issues that have created uncertainty in the minds of investors and we have made it clear that our objective is to have clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution and an independent judiciary.”

> Shishir.Sinha@thehindu.co.in

Published on March 12, 2018

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