Inflation will be contained soon: Finance Minister

New Delhi, May 8: The Government today gave the assurance that it would be able to contain inflation in the near future by removing the supply-demand mismatch and taking monetary and fiscal measures.

The main reason for the rise in inflation was shortage of commodities including metals and crude oil, sugar and pulses, and increase in money supply, which indicated the increase in demand, Finance Minister P Chidambaram told the Rajya Sabha while replying to supplementaries during the Question Hour.

He said while the manufacturing sector had witnessed sharp growth, the production of foodgrains like wheat, pady and pulses had stagnated over the last nine years.

The Finance Minister said inflation rate was 5.4 per cent in 2006-07 while in the last three years of the previous NDA regime also, it was slightly above five per cent and argued that inflation was inseparable from growth. The growth rate had reached eight per cent in the UPA regime while in the previous NDA regime, it was 5.8 on an average, he pointed out.

At this, former Finance Minister and senior BJP leader Yashwant Sinha intervened to say that the Minister was unnecessarily comparing the inflation rate with what it was under the NDA rule, as it was no ground for justifying the high inflation at present.

Moreover, he asserted that the Government's own economic survey had admitted that there was structural shift in the inflationary trend under the NDA regime as compared to developed countries.

Mr Chidambaram said he had no intention of pointing fingers at the previous regime, as he had just noted a fact.

He said the Government had initiated many steps on the supply side to contain inflation, besides monetary and fiscal measures like increasing the CRR by RBI etc.

The Minister again sought to point out that growth was bound to impact inflation. ''You compare the inflation rate to China, but in that country also, the inflation rate had gone up to three per cent now,'' he added.

He also said that a decision on future trading would be taken soon to help the farmers. The government was just waiting for the Abhijit Sen Committee report on the matter, he added.

UNI