IACC proposes 7-point programme for controlling inflation

New Delhi, Apr 2 (UNI) Indo-American Chamber of Commerce (IACC) has suggested a seven-point programme including supply side reforms and calibrating the fiscal and monetary tools to control inflationary pressure on the Indian economy.

''With the inflation figure hovering around 6.46 per cent, and threatening to spiral further upwards, it is time for the Government to take a realistic view of the situation and address various causes that lead to price spiral,''IACC President Deepak Pahwa said.

The issues to be addressed include supply side reforms, calibrating the fiscal and monetary tools, regulation of hedge funds, optimal management of foreign exchange, a pragmatic industrial policy and focus on fiscal deficit.

Every year the markets and the consumers get hit invariably by a short supply of one or the other essential or primary goods, the chamber said adding that to control the demand push inflation, the government has to extrapolate the quantum of shortages of each item and take appropriate measures for timely import.

It also said that increase in the rate of interest and enhancing cash reserve ratio (CRR) and statutory liquidity ratio (SLR) are considered to be effective tools to suck out the excess liquidity from the market.

Trans-border movement of capital, such as hedge funds, amounting to an estimated two trillion dollars is becoming a major problem for most of the countries including the developed ones, the chamber said and suggested that SEBI should come forward with a regulatory mechanism for the hedge funds at the earliest.

IACC further said the government has to come out with plans to liquidate the foreign exchange reserves in a calibrated manner by enhancing the threshold limit for investing abroad.

Also, the government's plan to create special vehicles for investing in money market abroad should be expedited at the earliest, the chamber added.

UNI