02-10-2007, 09:05 PM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Runaway inflation </b>
Pioneer News Service | New Delhi
growth process threatened by soaring prices
The sharp escalation in the prices of foodgrains has pushed the inflation up to a two-year high of 6.58 per cent, triggering major concerns for the UPA Government ahead of the Assembly elections and the Union Budget.
<b>With the RBI already hiking the interest rate by one per cent last week, the Government's options to control the inflation through drastic monetary measures are fast narrowing down. Experts feel that further hike in interest rate would adversely hit the investment and might lead to reversal of growth in manufacturing and industrial sectors.</b>Â Â
At the same time, Finance Minister P Chidambaram may have little option but to continue tinkering with interest rate and the RBI's intervention, because the UPA Government may lack the courage to curb its burgeoning expenditure.
The rising inflation graph sparked strong criticism from the Left parties who slammed the Government for not heeding to their advice on banning futures trade in foodgrains and slashing of fuel prices to check the upward trend.
The apex industry chambers have expressed serious concern over the rising inflation and asked the Government to take immediate steps to contain price rise.
The unchecked rise in inflation has badly dented the UPA's image and may be politically costly in the Assembly elections in Punjab and Uttarakhand. The aam admi has been the worst hit as the<b> Wholesale Price Index (WPI) based inflation has been pushed up mainly by rise in prices of food articles like vegetables (0.7 per cent), eggs, meat and fish (1.4 per cent), milk (1.4 per cent), fruits and oil seeds (1.7 per cent each).</b>
Prices of foodgrains, including wheat have also been ruling high to the discomfort of the common man. Wheat prices (commonly used Dara variety) are ruling at Rs <b>990 a quintal in the wholesale market, while it is selling at Rs 12 a kilo in retail stores.</b>
<b>WPI rose by 0.1 per cent to 208.8 from 208.5 per cent. The index for primary articles, with 22.02 per cent weightage in the WPI, increased by 0.6 per cent to 215 per cent from 213.7 the previous week.</b>
Meanwhile, the<b> index for fuel, power, light and lubricants (14.23 per cent weight) and manufacturing products having 63.75 per cent weight in the wholesale price index remained unchanged</b>.
<b>With the projection for the farm sector growth pegged at a dismal 2.7 per cent, the long-term inflation scenario looks equally bleak,</b> experts feel.
In a statement, FICCI said the Government should immediately commit itself to a twin long-term strategy, which combats bottlenecks in the supply of primary articles and manufactured products.
The Government should draw up a long-term action plan that can tackle low farm productivity, volatility in production, poor supply chain infrastructure and inefficiencies in marketing infrastructure for farm products, it said.
Reacting to the rise in inflation, Assocham said the RBI needs to take certain monetary measures, which would flush liquidity in the system and amount to taming the current rate of inflation.
The Left parties slammed the Government for not heeding to their advise on banning futures trade in foodgrains and slashing of fuel prices to check the upward trend.
The parties, which provide crucial outside support to the Congress-led Government, said the rise in prices of essential commodities will bring misery to the people and spell disaster for the economy.
"The Government should take certain steps like banning futures trading in essential commodities, reducing the prices of petroleum products and cracking down on hoarders to check price rise," senior CPI(M) leader S Ramachandran Pillai said.
<b>The Left had also been demanding revision of ad-valorem duty structure on oil imports, reversal of the dilution of the Essential Commodities Act and inclusion of more items under its purview to check inflationary pressures.</b> "The rate at which inflation is increasing will spell disaster for the economy in the coming days and bring more misery to the people," CPI General Secretary AB Bardhan said.
He asked the Government to revive the Public Distribution System for supply of foodgrains as the overall inflation rate had been impacted by spiralling prices of primary articles, especially those of vegetables, pulses and cereals. Criticising Finance Minister P Chidambaram's comments that inflation levels crossing the six per cent mark is not a new phenomenon, he said "if things are going beyond control, we will take to the streets."
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Pioneer News Service | New Delhi
growth process threatened by soaring prices
The sharp escalation in the prices of foodgrains has pushed the inflation up to a two-year high of 6.58 per cent, triggering major concerns for the UPA Government ahead of the Assembly elections and the Union Budget.
<b>With the RBI already hiking the interest rate by one per cent last week, the Government's options to control the inflation through drastic monetary measures are fast narrowing down. Experts feel that further hike in interest rate would adversely hit the investment and might lead to reversal of growth in manufacturing and industrial sectors.</b>Â Â
At the same time, Finance Minister P Chidambaram may have little option but to continue tinkering with interest rate and the RBI's intervention, because the UPA Government may lack the courage to curb its burgeoning expenditure.
The rising inflation graph sparked strong criticism from the Left parties who slammed the Government for not heeding to their advice on banning futures trade in foodgrains and slashing of fuel prices to check the upward trend.
The apex industry chambers have expressed serious concern over the rising inflation and asked the Government to take immediate steps to contain price rise.
The unchecked rise in inflation has badly dented the UPA's image and may be politically costly in the Assembly elections in Punjab and Uttarakhand. The aam admi has been the worst hit as the<b> Wholesale Price Index (WPI) based inflation has been pushed up mainly by rise in prices of food articles like vegetables (0.7 per cent), eggs, meat and fish (1.4 per cent), milk (1.4 per cent), fruits and oil seeds (1.7 per cent each).</b>
Prices of foodgrains, including wheat have also been ruling high to the discomfort of the common man. Wheat prices (commonly used Dara variety) are ruling at Rs <b>990 a quintal in the wholesale market, while it is selling at Rs 12 a kilo in retail stores.</b>
<b>WPI rose by 0.1 per cent to 208.8 from 208.5 per cent. The index for primary articles, with 22.02 per cent weightage in the WPI, increased by 0.6 per cent to 215 per cent from 213.7 the previous week.</b>
Meanwhile, the<b> index for fuel, power, light and lubricants (14.23 per cent weight) and manufacturing products having 63.75 per cent weight in the wholesale price index remained unchanged</b>.
<b>With the projection for the farm sector growth pegged at a dismal 2.7 per cent, the long-term inflation scenario looks equally bleak,</b> experts feel.
In a statement, FICCI said the Government should immediately commit itself to a twin long-term strategy, which combats bottlenecks in the supply of primary articles and manufactured products.
The Government should draw up a long-term action plan that can tackle low farm productivity, volatility in production, poor supply chain infrastructure and inefficiencies in marketing infrastructure for farm products, it said.
Reacting to the rise in inflation, Assocham said the RBI needs to take certain monetary measures, which would flush liquidity in the system and amount to taming the current rate of inflation.
The Left parties slammed the Government for not heeding to their advise on banning futures trade in foodgrains and slashing of fuel prices to check the upward trend.
The parties, which provide crucial outside support to the Congress-led Government, said the rise in prices of essential commodities will bring misery to the people and spell disaster for the economy.
"The Government should take certain steps like banning futures trading in essential commodities, reducing the prices of petroleum products and cracking down on hoarders to check price rise," senior CPI(M) leader S Ramachandran Pillai said.
<b>The Left had also been demanding revision of ad-valorem duty structure on oil imports, reversal of the dilution of the Essential Commodities Act and inclusion of more items under its purview to check inflationary pressures.</b> "The rate at which inflation is increasing will spell disaster for the economy in the coming days and bring more misery to the people," CPI General Secretary AB Bardhan said.
He asked the Government to revive the Public Distribution System for supply of foodgrains as the overall inflation rate had been impacted by spiralling prices of primary articles, especially those of vegetables, pulses and cereals. Criticising Finance Minister P Chidambaram's comments that inflation levels crossing the six per cent mark is not a new phenomenon, he said "if things are going beyond control, we will take to the streets."
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