By IANS
New Delhi ; India’s annual rate of inflation shot up to a three-year high Friday, worsening the United Progressive Alliance (UPA) government’s headache as its allies mounted pressure to bring down the prices of essential commodities without any delay.
The annual rate of inflation shot up to a three-year high of seven percent for the week ended March 22, causing prices of essential commodities to rise.
However, the government said measures taken to curb the price-rise would take some time to take full effect.
From the office of Prime Minister Manmohan Singh to Agriculture Minister Sharad Pawar and Finance Minister P. Chidambaram to Commerce Minister Kamal Nath, there was optimism that inflation will be contained, albeit with a time lag.
“The government will take more fiscal measures, if needed, to check inflation. It will take some time for government measures to have positive impact on the price rise,” an official in Prime Minister’s Office said.
Planning Commission Deputy Chairman Montek Singh Ahluwalia echoed a similar view and said that the measures taken by the government, like duty cuts essential commodities and ban on export of rice, would impact the rising inflation.
“The government will continue to keep vigil on the price rise. It will take some time – a month or so – for the measures to show results in terms of moderating inflationary pressures,” Ahluwalia told reporters here.
The government also issued a fresh warning Friday to those who have been stoking inflationary pressures and said containing price rise was the top priority for the ruling United Progressive Alliance (UPA).
“We will not hesitate to take the strongest possible measures, including using some of the legal provisions we have against hoarding,” Commerce Minister Kamal Nath said on the margins of a tourism event in Singapore Friday.
“We have great supply side challenges in India at the moment with 15 million people moving from having one meal a day to two meals a day.”
Leading Indian industrialists and businessmen also called for caution.
“While the decision to cut customs duties on food and essential commodities will make imports cheaper, the efficacy of these measures will be limited in the medium term,” said the Federation of Indian Chambers of Commerce and Industry (Ficci).
It cautioned the government against any further hike in interest rates that would extremely harm the economy.
The government’s allies termed the situation as “alarming”. “The situation is indeed alarming. We have to take immediate measures to bring down inflation,” said Rashtriya Janata Dal (RJD) leader and union Minister Raghuvansh Prasad Singh.
Coming down heavily on the government, the Left parties criticised it for doing “too little too late.” They plan a nationwide agitation April 15, the day Parliament reconvenes, against price-rise.
“Despite our continued pressure the government has done too little too late. It now needs to take more measures to bring prices under control,” said Communist Party of India-Marxist MP Roopchand Pal.
When the Budget session of parliament reconvenes ten days from now, the government will face attacks not only from the main opposition Bharatiya Janata Party (BJP) but also from its own allies.
“The government has taken measures. But the situation now warrants tighter and more effective steps,” said Nationalist Congress Party (NCP) spokesperson D.P. Tripathi.
Cutting across political affiliations, parties are demanding a check on speculative trading, hoarding and black marketing of essential commodities.
“The government has to bring down prices. It has to check private players,” said RJD MP Devendra Prasad Yadav.
Expressing the industry’s hope that the situation would be tackled soon, K.V. Kamath, managing director and CEO of ICICI Bank and president-designate of the Confederation of Indian Industry (CII) said: “I am sure policy makers both at the monetary level and in the ministry will work together to ease supply side constraints.”
On Monday, the government took steps such as banning export of non-basmati rice and pulses, scrapping import duties on non-refined edible oil and cutting import duties on refined oil, butter, ghee and maize to check rising prices.
The inflation rate was already ruling at a 13-month high during the previous week, as per data released by the commerce and industry ministry here Friday.
The statistics further showed that prices of minerals shot up 38 percent in just a week between March 15 and March 22, while vegetables were costlier by as much as 4.9 percent.
Similarly, prices of lentils were up 1.4 percent, edible oils were costlier by 1.6 percent and cement prices remained unchanged.
The Reserve Bank of India (RBI) has already said that it will take monetary and fiscal steps to contain inflation – which it had hoped to contain below the five percent mark for the current fiscal.
Analysts now expect the central bank to take some immediate steps to check the inflationary pressures like hiking the benchmark interest rate to control the supply of money in the financial system.