Fundamentals of economy are robust: PM

{image-manmohan singh_29042008.jpg news.oneindia.in}New Delhi, Apr 29: Prime Minister Manmohan Singh today said he is confident that the steps taken to reverse rising prices will moderate inflation and urged the world community to address the problems of spiralling food and fuel prices.

The wholesale price index for past couple of weeks has remained static at seven per cent or more which is way above the comfort level defined by the Reserve Bank of India. This has added to policy headaches facing both the central bank and the government, which faces a string of state elections this year and federal polls scheduled for 2009. ''The government is fully alive to the challenge and has taken several steps to reverse the recent spurt in prices. I am confident that we will be able to moderate the prices rise,'' Mr Singh told a gathering of top Indian businessmen.

''However, we cannot ignore the fact that there are external factors which are contributing to inflation over which we do not have much control.'' He said many developing countries were deeply concerned about rising global commodity prices, especially those of food and petroleum products.

''The world community has not done enough to address this challenge,'' Mr Singh said.

''The diversion of land from food crops to biofuels and increasing use of available food grains and vegetable oils for the production of biofuels have greatly contributed to the rising food prices.'' The Prime Minister said the broad macroeconomic fundamentals of the country's economy were robust and the medium- and long-term outlook are highly encouraging.

UNI