01-20-2007, 08:35 AM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Inflation skyrockets, exceeds RBI's fears </b>
Pioneer News service | New Delhi
Govt 'concerned', corrective steps inevitable: FM
After the feel-good stories of GDP growth and Sensex boom, the bitter reality of the economy is back to haunt the UPA Government. The galloping inflation raises serious concerns about demand-supply mismatch and threatens an all-round increase in the price index.
With the inflation figure far ahead of the 5.5 per cent of the RBI's projection for this fiscal, an all-round interest hike seemed inevitable. The interest hike may come about when the RBI takes up credit policy review on January 31. For the aam admi, who is reeling under the burden of ever increasing prices of consumer goods, including vegetables and foodgrains, there is bad news in store. Â
<b>Finance Minister P Chidambaram on Friday admitted that inflation, which has touched a two-year high of 6.12 per cent, is a cause for concern.</b>
Even as the Finance Minister talked of measures to curb the inflationary trend in the economy, industry body Assocham president <b>VN Dhoot said in a statement that inflation was expected to rise further over the next two-three months</b>.
The chamber suggested that the Reserve Bank should take corrective steps in both the repo and the reverse rates in the forthcoming monetary policy review on January 31.
Spelling out measures to contain the inflation, Chidambaram said, "Ultimately inflation is a monetary phenomenon and is influenced by supply side. Hence, the Ministry of Finance is in touch with both the Reserve Bank and the Ministry of Agriculture and Consumer Affairs. We will watch the situation carefully and take whatever steps are required to be taken."
Inflation touched 6.12 per cent for the week ending January 6, compared with 5.58 per cent for the previous week. The reason was primarily sharp increase in prices of consumer goods like tea, vegetables, fruit, maize, arhar, wheat, and various seeds. Aviation turbine fuel, naphtha and furnace oil have also moved up. Prices of some manufactured items like steel products and edible oil have risen too.
<b>The Wholesale Prices-based Inflation (WPI) crossed six per cent for the first time this fiscal. </b>During the last year, inflation stood at just 3.86 per cent during the week ended January 7, 2006.
<b>With agriculture growth stagnated below four per cent, the prices of eatables are unlikely to improve in the near future. This would make the Finance Minister's task to curb inflation all the more difficult</b>. With projections showing that the Government has failed to cut down both revenue and fiscal deficits, Chidambaram may find it difficult to meet the expectation of the allies in presenting his next budget.
<b>Majority of the UPA allies and the Left are opposed to tax increases and reduction of subsidy and are pressing for more populist measures. The rising inflation will reduce the Finance Minister's scope to balance his books while accommodating the demands of the allies.</b>
Aware of the compulsions of coalition politics, both Prime Minister Manmohan Singh and Chidambaram have been pleading with the Left and other allies to unshackle the reform process, but so far they have miserably failed. The rising inflation may just be the side effect of this failure.
Experts feel that there could be more bad news in store on the economic front in the months to come.
<!--QuoteEnd--><!--QuoteEEnd-->
Nareshji,
I told you, Moron Singh and his gang are messing up India's economy. We are seeing and more bad news will soon hit. Even Oil price are dropping but poor management is main problem. Moron Singh should take retirement along with Aiyar and Chitambaram.
Pioneer News service | New Delhi
Govt 'concerned', corrective steps inevitable: FM
After the feel-good stories of GDP growth and Sensex boom, the bitter reality of the economy is back to haunt the UPA Government. The galloping inflation raises serious concerns about demand-supply mismatch and threatens an all-round increase in the price index.
With the inflation figure far ahead of the 5.5 per cent of the RBI's projection for this fiscal, an all-round interest hike seemed inevitable. The interest hike may come about when the RBI takes up credit policy review on January 31. For the aam admi, who is reeling under the burden of ever increasing prices of consumer goods, including vegetables and foodgrains, there is bad news in store. Â
<b>Finance Minister P Chidambaram on Friday admitted that inflation, which has touched a two-year high of 6.12 per cent, is a cause for concern.</b>
Even as the Finance Minister talked of measures to curb the inflationary trend in the economy, industry body Assocham president <b>VN Dhoot said in a statement that inflation was expected to rise further over the next two-three months</b>.
The chamber suggested that the Reserve Bank should take corrective steps in both the repo and the reverse rates in the forthcoming monetary policy review on January 31.
Spelling out measures to contain the inflation, Chidambaram said, "Ultimately inflation is a monetary phenomenon and is influenced by supply side. Hence, the Ministry of Finance is in touch with both the Reserve Bank and the Ministry of Agriculture and Consumer Affairs. We will watch the situation carefully and take whatever steps are required to be taken."
Inflation touched 6.12 per cent for the week ending January 6, compared with 5.58 per cent for the previous week. The reason was primarily sharp increase in prices of consumer goods like tea, vegetables, fruit, maize, arhar, wheat, and various seeds. Aviation turbine fuel, naphtha and furnace oil have also moved up. Prices of some manufactured items like steel products and edible oil have risen too.
<b>The Wholesale Prices-based Inflation (WPI) crossed six per cent for the first time this fiscal. </b>During the last year, inflation stood at just 3.86 per cent during the week ended January 7, 2006.
<b>With agriculture growth stagnated below four per cent, the prices of eatables are unlikely to improve in the near future. This would make the Finance Minister's task to curb inflation all the more difficult</b>. With projections showing that the Government has failed to cut down both revenue and fiscal deficits, Chidambaram may find it difficult to meet the expectation of the allies in presenting his next budget.
<b>Majority of the UPA allies and the Left are opposed to tax increases and reduction of subsidy and are pressing for more populist measures. The rising inflation will reduce the Finance Minister's scope to balance his books while accommodating the demands of the allies.</b>
Aware of the compulsions of coalition politics, both Prime Minister Manmohan Singh and Chidambaram have been pleading with the Left and other allies to unshackle the reform process, but so far they have miserably failed. The rising inflation may just be the side effect of this failure.
Experts feel that there could be more bad news in store on the economic front in the months to come.
<!--QuoteEnd--><!--QuoteEEnd-->
Nareshji,
I told you, Moron Singh and his gang are messing up India's economy. We are seeing and more bad news will soon hit. Even Oil price are dropping but poor management is main problem. Moron Singh should take retirement along with Aiyar and Chitambaram.