New Delhi, May 25 (UNI) Finance Minister P Chidambaram today categorically asserted that spiralling prices will not have a major impact on the prospects of the UPA government and avowed that growth will not be sacrificed at the altar of inflation.
In an interview to Tehelka magazine, Mr Chidambaram said the government was doing everything possible within its mean to check prices and indicated that the tolerance level of inflation among the people was going down.
The Finance Minister said the historical level of tolerance of prices was an inflation rate of four to five per cent and there was disquite if the price situation goes beyond this.
He observed that political parties cash in on this resentment to suit their ends.
To a question relating to banning the futures trading by the government in certain commodities, Mr Chidambaram said the Abhijit Sen Committee itself had recommended banning futures in rice, wheat, toor and urad.
The Finance Minister was of the view that the ban on futures trading may not bring down inflation rate, but admitted that it was political compulsion which had forced the government to take such a step.
''When the Parliamentary Standing Committee says the same thing, if all political parties, including the BJP which introduced commodities trading in the first place, demand a ban, if people in villages start blaming futures and commodities trading as the reason for price rise, you have to heed the advice of the majority,'' he said.
''That is what we have done. I'm reasonably sure this ban will have no impact on the prices of these items, but sometimes you do things that may have no positive impact, but hopefully no negative ones either,'' he added.
Asked to comment on IMF's observation that there was overheating of the Indian economy, Mr Chidambaram explained that this was a phenomenon relating to demand being far more than excess capacity.
''You can have overheated segments of an economy, but I do not think, in India, that demand across the board is in excess of capacity. For example, there is a demand for steel but we also export steel. The same for cement and rice.'' The Finance Minister, however, agreed that in some markets there was high demand and some bubbles have built up. For example, in the real estate market and possibly in the equity market.
''But to say the Indian economy is overheated is something I don't agree with. I think there is still capacity for our economy to grow at a higher rate. The consequence of arguing that the Indian economy is overheated is to slowdown the growth rate. And that would be disastrous for India.'' Mr Chidambaram said achieving high growth rate of nine-ten per cent for the next 20-30 years was the only way to eliminate poverty.
''We get weary easily...You have to work hard for it,'' he added.
UNI SBA/GS SG BD1530