Need for mechanism to deal with sudden spurt in prices:Pranab

New Delhi, Feb 15 (PTI) Worried over sudden spurt inprices of food items, Finance Minister Pranab Mukherjee todaymade a case for setting up a mechanism to take advancecorrective measures to deal with such problems.

"... perhaps there is a case for establishing standardoperation procedures for addressing both sudden andanticipated price fluctuations," he said at the first meetingof the Inter-Ministerial Group (IMG) on inflation.

Pointing out that there is pressure on inflationemanating from prices of food and oil, Mukherjee said, "Therisk of it spilling into the core sector requires constantmonitoring, timely and proactive response".

The Minister also underlined the need to review thepresent system of monitoring wholesale and retail prices ofthe essential commodities.

"There is a need to improve the manner in which theavailable information is put to use in designing andformulating the required policy responses," Mukherjee said.

The IMG, headed by Chief Economic Adviser in the FinanceMinistry Kaushik Basu, was formed by the government to suggestan institutional mechanism to read "warning signals" withregard to agricultural production.

The IMG was set up in the wake of stubbornly highinflation rate of 8 per cent, that the country is battlingcurrently. The overall inflation has remained above thecomfort zone of 5-6 per cent for over a year now.

Also food inflation, which soared to 18 per cent inDecember, has gradually cooled to 13.07 per cent towards theend of January.

The IMG meeting today was attended by RBI Deputy GovernorSubir Gokarn, DEA Secretary R Gopalan, Chief Statistician TCAAnant, besides Secretaries of Consumer Affairs, Food andPublic Distribution, Agriculture and Cooperation, AnimalHusbandry, Dairying and Fisheries.

The meeting, according to a Finance Ministry statement,also stressed on the need to move away from reacting to everyepisode of inflation and price spike with immediate policyresponses.

The efforts, it added, should be to study flaws in thesystem and to take advance corrective measures so that suchspikes do not occur in the future.

Issues like link between futures market and price rise,market margins, agricultural productivity and the role ofstate governments and district administration in pricemanagement also figured during the meeting.