By IANS,
New Delhi: The centre has asked the states to strengthen their public distribution systems (PDS) to minimise the impact of high inflation on the poor, Finance Minister Pranab Mukherjee said here Monday.
“The central government has requested the states to strengthen their public distribution systems to ensure that the vulnerable groups of the society are not adversely affected by the current level of inflation,” Mukherjee said at the second annual conference of finance secretaries of states and union territories.
He urged the state governments to join hands with the centre in curbing inflation. “I would like the state finance secretaries take appropriate steps in this regard. With these efforts, inflation should further go down to more acceptable levels.”
Mukherjee said the government’s initiatives had helped bring down inflation from 11 percent in April to 8.6 percent in September.
“Inflation is a major area of concern. The current financial year started with a headline inflation of 11 percent. The main drivers of this relatively high level of inflation were food prices. A number of anti-inflationary measures have been taken by the central government to bring down the rate of inflation.”
The finance minister asked the state governments to properly utilise the centre’s grants-in-aid.
The 13th finance commission headed by Vijay L. Kelkar has recommended grants-in-aid to states amounting to Rs.3,18,581 crore for period 2010-15. It constitutes 18.03 percent of total money transfer from centre to state.
“While some grants become applicable from the current year, many of them are recommended to start from the next financial year. Government of India has issued guidelines for most of these grants starting from current year and I would expect the states to be able to avail the grants in a timely manner and benefit from them,” said Mukherjee.
Voicing concern over high cash balances with some state governments, Mukherjee advised state finance secretaries to adopt better cash management.
“In recent years we have seen that the states have been maintaining relatively high levels of cash balances in the form of treasury bills, which have sometimes exceeded Rs.1 lakh crore. Although it may be desirable for states to maintain certain levels of cash balances, there is a cost associated with such high cash balances. There is, therefore, a need to visit this issue for better cash management.”