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Expressing concern over increasing international crude oil and commodity prices, the Finance Minister, Mr Pranab Mukherjee, said on Tuesday that these may spill over and add to the domestic inflationary pressure.
Addressing the 83rd annual general meeting (AGM) of the Federation of Indian Chambers of Commerce and Industry (FICCI), the Minister said, “The creeping increase in international crude oil and commodity prices is a reality that we are already confronting. The possibility of the global commodity inflation adding to domestic inflationary pressures cannot be ruled out.”
Mr Mukherjee added that despite the recent decline, inflation continues to be concern. “There are domestic supply side pressures on food prices that we have been grappling with for the past several months. The challenge before the Government and monetary authority has been to support the recovery process without compromising on price stability. The task has not been easy but we are making progress,” he said.
The Minister also pointed out the challenges that the economy is facing and said that problems of large fiscal deficit, high public debt and unemployment levels in advanced economies could spill over to international financial markets.
“The rapid recovery of the growth momentum is comforting but we cannot be complacent as there are several challenges that the Indian economy faces from its current external and domestic context,” said Mr Mukherjee.
Fiscal consolidation
He also reiterated the need to stick to the path of fiscal consolidation.
“We have to ensure that revival in private investment is sustained and goes back to the pre-crisis growth rates. This requires a stronger fiscal consolidation to enlarge the resource space for private enterprise,” said Mr Mukherjee.
On agriculture, Mr Mukherjee said that there is a need to significantly step up investment in the sector both by the private and public sectors.
“Determined measures on investment issues will help address the structural concerns on inflation management. It will also ensure a more stable macroeconomic environment for continued high growth in the medium term,” he said.
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