New Delhi, Jun 21 (UNI) The government today hinted that monetary measures are in the offing to check spiralling prices and claimed that the rate at which prices have been rising for non-fuel products has been coming down to touch an inflation rate between 5.5 per cent to six per cent a year from now.
"RBI Governor Y V Reddy has met Prime Minister Manmohan Singh and Finance Minister P Chidambaram this morning. The government will take appropriate action," Finance Secretary D Subbarao told a newsconference here.
Also present on the occasion was Chief Economic Adviser Arvind Virmani and other advisers to the Finance Ministry.
A statement by Finance Minister P Chidambaram was distributed relating to the inflationary situation.
Mr Subbaraorao, however, was not categorical as to whether there would be immediate cut in taxes, including petrol and petroleum products, to check the skyrocketing prices.
He took recourse to a remark made by Mr Chidambaram's statement in which he said giving up revenues and borrowing an equivalent amount in the market in order to finance expenditure would also be inflationary. The Finance Minister had stated this while replying to a suggestion made by former Finance Minister Yashwant Sinha that the government could have made deeper cuts in taxes.
"Nevertheless, I take Mr Sinha's suggestion on board and will explore the option," Mr Chidambaram said.
The Finance Secretary said he was not in a position to say as to what steps the RBI would take as it was an independent monetary authority. He said it was also for this very reason that he was unable to indicate as to when these steps would be announced. Mr Virmani claimed that the pace at which prices have been rising in non-fuel items has been coming down since March 2008 and projected the inflation rate to be in the region of 5.5 per cent to six per cent a year from now.
He, however, said the headline inflation rate would continue to rise as a consequence of "a mathmetical inevetiable" due to the base year effect adding that 94 per cent of the weekly index rise of 11.05 was a result of increase in fuel and petrolem products.
Mr Viramani said the Finance Ministry sticks to its projections on the growth rate for the current fiscal which was 8.5 per cent, plus or minus 0.5 per cent.
MORE UNI GS SR HS1444