New Delhi, June 13 : Deputy Chairman of Planning Commission Montek Singh Ahluwalia on Friday asked people to have patience as annual inflation rate hits seven-year high of 8.75 inviting the ire of Left parties.
Ahluwalia while talking to reporters here today said that people should trust the government to bring down inflation.
"There is no way to reduce inflation instantly. If the inflation needs to be reduced then lot of patience is required. But people should trust government. And I believe that government has taken steps, which would certainly help in controlling inflation," said Ahluwalia.
Inflation raced to its highest in more than seven years at the end of May, stoking expectations of further tightening by the Reserve Bank of India (RBI) to calm price pressures following this week's surprise hike to its key lending rate.
Latest Indian inflation data revealed that the inflation rose to 8.75 per cent during the week ending May 31, rising from the previous week's 8.24 per cent. The inflation rate is now at it's highest since February 10, 2001, when it was 8.77 per cent.
Meanwhile, the left allies of the United Progressive Alliance (UPA) government have expressed their anguish over its failure to control inflation.
D. Raja, national secretary, communist party of India (CPI) alleged that the central government is depending upon market forces to control prices.
"When it comes to inflation, when it comes to price rise the government leaves everything to market forces. Government is so helpless before the market forces. The government hopes that market forces will operate and bring down the inflation rate and control the prices. It is very I should say shameful to look at the helplessness of the government," said Raja while talking to reporters in New Delhi
RBI on Wednesday unexpectedly raised its key lending rate by 25 basis points to 8.0 per cent to contain inflation expectations, but left all other rates unchanged.
It was the first hike in the repo rate by the central bank in more than a year, and economists expect further policy tightening as a recent rise in state-set fuel prices is expected to push inflation to 13-year highs above nine per cent.
In three steps in April and May, the RBI raised the Cash Reserve Ratio (CRR), the amount of funds banks have to keep on deposit with it, by 75 basis points to 8.25 per cent, its highest level in seven years, to control cash in the system.
India's economy, Asia's third largest, is estimated to have grown 9.0 per cent in 2007-08.