Steps afoot to check prices; 12.63% inflation matter of concern

New Delhi, Aug 22 (UNI) Assuring that more steps are afoot to bring down prices, the Finance Ministry today contended former Finance Minister Yaswant Sinha's statement that ''monetary measures will not help'' in checking prices, saying these measures work with a lag effect and will moderate aggregate demand.

The Ministry sources said headline inflation measured by Wholesale Price Index (WPI) ''continues to be a matter of concern'' and noted that it touched a 16-year high of 12.53 per cent for the week ending August 9, 2008.

The sources said the government is examining a scheme for supply of four lakh tonnes of pulses with a subsidy of Rs ten per kilogramme. The scheme will be brought in public domain soon.

They said the government has approved open market sales of up to 60 lakh tonnes of wheat.

The government has also decided to release an additional quantity of five lakh tonnes of non-levy sugar during August and September, 2008.

The sources said the government has introduced a scheme for the release of edible oil with a subsidy of Rs 15 per kilogram. Public Sector Undertakings will import ten lakh tonnes of edible oils. Of this 2.8 lakh tonnes have already been contracted for and 1.6 lakh tonnes have been actually imported and distributed to the States.

''We have taken note of Mr Yashwant Sinha's comment that monetary measures will not help. Monetary measures are intended to help address the issue of money supply and liquidity. Hence, they will help in moderating aggregate demand,'' they said.

The sources said the other part of the problem was supply side.

Prices of fruit, vegetables, milk, tea are largely governed by localised supply-demand factors and any other local disruptions like rain. It is the movement of prices of these items which have impacted the primary articles group.

The sources said in the week ending August 9, 2008, the prices of 17 primary articles declined on a week-on-week basis and the prices of 56 articles showed no change.

''Supply side measures will work in the medium to long-term,'' the sources said.

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