"Supply side constraints are a reason for high inflation. I believe state governments ought to play a very positive and constructive role. Some states like West Bengal had played and the chief minister herself intervened as a result supply side constraints were removed to a certain extent," Mukherjee said at a Ficci seminar here.
The minister said, "We are taking more lasting and positive steps. In the last two budgets I made special provisions for the second Green Revolution for pulse and edible oil districts and this has started yielding results."
Mukherjee said that due to huge fiscal expansion the government had to do to prevent further deceleration of growth, this had created a pressure on inflation.
"RBI correctly thought that extra liquidity should be sucked out of the system by following a tight monetary policy," he said.
"I am happy that headline inflation has come down from dangerously close to the double digit figure around 9.7 per cent to 7.47 per cent in the month of December and I believe that it will continue till March," he said.