New Delhi, Feb 25 (ANI): Union Finance Minister Pranab Mukherjee today said that a sharp price in food price inflation has been a major cause of concern of economy during 2010-11
Presenting the economic survey in Lok Sabha, Mukherjee said: "A sharp price in food price inflation has been a major cause of concern of our economy during 2010-11, however, high inflation in food article is not unique to India."The inflation outlook will be shaped by the food price situation and the demand side pressures in the economy. The current growth and inflation trend warrant persistence with and anti-inflationary monetary stance," he added.
He suggests that the concurrent consolidation of fiscal deficits will, however, be essential as it is expected to ease the conduct of effective monetary policy in near future.
"The reduced fiscal deficits will permit greater availability of credit to sustain growth, while tighter monetary policy starts to transmit its impact in reducing inflationary pressure," he said.
He further said that the whole sale price index (WPI) of food inflation rose to 13.6 per cent in December 2010 on account of unfavourable agricultural supply conditions coupled with the waning of base effects. There are signs of food and fuel price increases spilling over into general inflation.
The survey further points out that the rise in the purchasing power owing to rapid growth of economy and inclusive programmes like the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) partly might have contributed to the upward trend in inflation. The survey observes the policy challenges of maintaining the growth momentum in the economy with price stability is going to be a main key focus area for monetary policy and macroeconomic management.
"The measures taken during the year included selective ban on exports and future trading in food grains, zero import duty on select food items and distribution of imported pulses and edible oils through the PDS," the survey added. (ANI)