In an interview to 'Devil's Advocate,'' Mr Nath said tackling inflation was not like "pressing a button and it comes down". "The government can control it only to a very small extent." Mr Nath said the Centre's efforts would fail if states do not co-operate.
The programme is broadcast by CNN-IBN.
Mr Nath said: "if forward trading is the reason of inflation why won't we do it? We want to contain inflation." He said the "Need of the day is to look at it (future trading) in all its merits." The Minister said if the states were unwilling to use "The power they have, the laws they have, the regulations they have against hoarding, against profiteering, against excess stocking, obviously the Central government will fail." The Minister accepted that although inflation has shown a marginal decline last week, "we have a major battle" ahead.
Mr Nath said within "a couple of days" the government would do more but assured that there would be "no knee-jerk reactions".
He, however, claimed that the present inflation was a consequence of "unprecedented growth over the last four years." "The fact of the matter is this, we have taken steps and the decline has started. The decline is small. We expected the decline in inflation to be much more. Any decline is reversible, but we're confident that this decline is only going to be more," he said.
The Minister said the government needed a series of policies to tackle inflation.
He said, "There's no one-size fits-all solution for inflation." Speaking about future measures the government is considering, Mr Nath spoke of fiscal and monetary steps. "You cannot have too much of money chasing too few goods." Talking about the conflict of growth and inflation, Mr Nath said: "If it means controlling inflation, we are prepared to live with less growth." However, the Minister categorically ruled out reducing increased expenditure envisaged in the Budget on the Rs 60,000 crore farm loan waiver, the NREGA and the 6th Pay Commission, which will inject money into the economy and therefore push inflation.
"This is the greatest economic stimulus in rural India," he said.
"We had to stimulate economic activity, economic growth in our rural areas. This was a major step." Mr Nath accepted that budgetary expenditure would generate demand but "it would not be instant".
"But, of course, when you have growth there is this challenge of managing growth, of aspirations," Mr Nath said.
The Minister ruled out using Rupee appreciation to stem inflation.
"We don't calibrate our rupee. Our rupee is balanced against a basket of currencies. And unlike some countries who calibrate their currencies and lose their credibility in the international market, it's very important for the rupee to move in the way its been moving. We don't want to artificially calibrate the rupee." When questioned about criticism of his decision to ban cement exports, the Minister said this had been done "in anticipation of a steep price rise. " "If we had done it when the prices had shot up you would have said we've done it too late." When it was pointed out that a ban on cement exports or the threatened ban on steel exports would only deprive India of hard-won export markets without appreciably altering the domestic situation, the Minister claimed that it was a question of "a signal" and "perception".
"I'm conscious of exports. Exports are very very important to me.
I'm the Minister for exports (but) our priority is to control inflation. That' s number one," he said.
Mr Nath said, "Inflation is not merely controlled by supply and demand issues. Inflation is also controlled by perception. And if perception is that there's a shortage (we have to act)."