New Delhi: Inflation slowed down in the first week of the new fiscal giving relief to the Government pushed to the wall by allies and Opposition parties over rising prices, but at 7.14 per cent it was still at a three-year high.
The wholesale price based inflation declined by 0.27 per cent for the week ended April 5 on account of a decline in prices of fruits, gur, and certain edible oils, imports of which were made easy by the government through either abolishing or cutting customs duty.
Hinting at a rate hike RBI Governor YV Reddy said that inflation levels were too high. He also said that the Government needs to show it’s being proactive in bringing prices down.
“The Government has to demonstrate that it’s trying to do something if the Government is not trying to find medium term solution. They have to at least show that sensitivity to the problem whether that is wise programme or not to that limited extend,” he said.
“I do feel as long the general impulses grow are there general stability is maintained if the government are trying to do something for poorer section to demonstrate its good will and maintain social and i think there is something we could live with it.”
However, agriculture Minister Sharad Pawar has his own -- some might say unique -- explanation for rising prices.
He blamed the rural employment guarantee scheme and the money it's apparently given to the poor.
“Government took certain steps like the NREGP increased circulation of money in the market. Rs 12-13,000 crore went to the hands of the poor. They used that money mostly to buy grains. This led to more demand of food grains Supply of food grains has not kept up with the demand, “ Pawar said.
Moving a step beyond the Finance Minister P Chidambaram's accusation of steel cartels, Steel Minister Ram Vilas Paswan said that the coordinated hike by producers is unacceptable.
Paswan said, “The price hike from JSW Steel, Ispat Industries and Essar Steel seems to be coordinated. Such a move by steel producers is unacceptable.”
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