India to rein inflation from 2-yr high - Chidambaram
By Anurag Joshi
MUMBAI (Reuters) - The rise in India's inflation rate is due to strong growth and robust consumer demand but the government would use all possible measures to control the price rise, the finance minister said on Saturday.
The benchmark wholesale price inflation rate rose to a two year-high of 6.58 percent in late January, adding to expectations that last week's interest rate rise would be followed by further measures to calm prices.
The spike in inflation could not have come at a worst time for the ruling Congress Party as it faces polls in three states later this month and the government is keen get the rate back to its own comfort level of around 5.0 percent.
"GDP is rising at more than 9 percent. Year-on-year credit growth is little over 30 percent and money supply is close to 21 percent," Finance Minister Palaniappan Chidambaram told reporters.
"This is an unusual combination of factors. The government is determined to take all steps to moderate inflation. We have done it before and we are confident of doing it again."
Fearing a backlash in the elections, the ruling coalition headed by the Congress Party cut import duties on items ranging from cement to capital goods to palm and sunflower oils in January to check the rise in inflation.
For its part, the central bank announced a 50 basis point increase in the cash reserve ratio in December, which lowered the amount of funds banks had available for lending.
It followed this by raising its short-term lending rate by 25 basis points to 7.50 percent on Jan.31. But it left its borrowing rate unchanged at the quarterly policy review.
The central bank has said getting inflation down to its target range of 5.0-5.5 percent at the end of the financial year in March 31 is a policy priority.
The Reserve Bank of India was monitoring developments and could use all of its policy instruments including raising the cash reserve ratio to contain inflation, deputy governor Rakesh Mohan said on Friday.
The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it has covers a larger number of products and is published weekly.
Growth in India, Asia's fourth-largest economy, has averaged 8.3 percent in the past three years, leaving ports, roads and power generation overstretched. The government estimates the economy will grow 9.2 percent in 2006/07, its fastest pace in nearly two decades.
MUMBAI (Reuters) - The rise in India's inflation rate is due to strong growth and robust consumer demand but the government would use all possible measures to control the price rise, the finance minister said on Saturday.
The benchmark wholesale price inflation rate rose to a two year-high of 6.58 percent in late January, adding to expectations that last week's interest rate rise would be followed by further measures to calm prices.
The spike in inflation could not have come at a worst time for the ruling Congress Party as it faces polls in three states later this month and the government is keen get the rate back to its own comfort level of around 5.0 percent.
"GDP is rising at more than 9 percent. Year-on-year credit growth is little over 30 percent and money supply is close to 21 percent," Finance Minister Palaniappan Chidambaram told reporters.
"This is an unusual combination of factors. The government is determined to take all steps to moderate inflation. We have done it before and we are confident of doing it again."
Fearing a backlash in the elections, the ruling coalition headed by the Congress Party cut import duties on items ranging from cement to capital goods to palm and sunflower oils in January to check the rise in inflation.
For its part, the central bank announced a 50 basis point increase in the cash reserve ratio in December, which lowered the amount of funds banks had available for lending.
It followed this by raising its short-term lending rate by 25 basis points to 7.50 percent on Jan.31. But it left its borrowing rate unchanged at the quarterly policy review.
The central bank has said getting inflation down to its target range of 5.0-5.5 percent at the end of the financial year in March 31 is a policy priority.
The Reserve Bank of India was monitoring developments and could use all of its policy instruments including raising the cash reserve ratio to contain inflation, deputy governor Rakesh Mohan said on Friday.
The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it has covers a larger number of products and is published weekly.
Growth in India, Asia's fourth-largest economy, has averaged 8.3 percent in the past three years, leaving ports, roads and power generation overstretched. The government estimates the economy will grow 9.2 percent in 2006/07, its fastest pace in nearly two decades.
Source : Reuters
posted by anandsonline @ Sunday, February 11, 2007
0 Comments:
Post a Comment
<< Home