The Hindu : National : "Inflation will be controlled soon"

Online edition of India's National Newspaper
Friday, Dec 10, 2004

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National

"Inflation will be controlled soon"

By Our Special Correspondent

NEW DELHI. Dec. 9. The Union Finance Minister, P. Chidambaram, today assured the Lok Sabha that the Government would soon rein in inflation and bring down the prices of essential commodities.

"I am confident that the worst is over. The Government is doing its best. We will gain mastery over inflation and bring down prices," he said.

Replying to the debate in the Lok Sabha on the price rise, Mr. Chidambaram said that he was praying for a good Rabi crop and once that happened he was confident that the Wholesale Price Index and the Consumer Price Index would moderate, allowing the Government to bring down prices. "The Government will ensure that prices of essential commodities remain within the reach of the common man."

Opposition unconvinced

The BJP-led Opposition parties, however, remained unconvinced by Mr. Chidambaram's reply and walked out of the Lok Sabha.Mr. Chidambaram refuted the Opposition charge that the faulty policies of the United Progressive Alliance Government were to blame.

Mr. Chidambaram listed four reasons: The increase in international price of crude oil, the increase in the demand for commodities such as coal, metal and steel from countries such as China and India, improper liquidity management by the previous regime and a deficient monsoon.

The Government had no control over the international price of crude oil and it had done all it could to insulate the consumers from its impact. "We are the victims of the international prices of petroleum products. It has created an extremely difficult situation for us. Once they moderate, inflation will also moderate," he assured the House.

Oil requirement

Mr. Chidambaram sought to impress upon the members the fact that 70 per cent of the country's oil requirement was met through imports and that there was a limit to what the Government could do to insulate the consumers. "The price of oil went up to $ 56 a barrel; there was no way the Government could totally insulate the Indian market from it unless the entire burden was borne by the exchequer," he said.

Mr. Chidambaram said the Indian oil companies were bearing a Rs. 20,000-crore burden while the exchequer was also taking cut in revenues through adjustment of customs and excise duties. "If the exchequer is made to bear a larger burden, it will mean cutting allocations for other programmes like food for work and Sarva Shikhsa Abhiyan,'' he said.

`Ready to adjust duties'

The Minister said the Government was willing to adjust duties to the extent that the Exchequer could bear. However, there was no scope for any further reduction of duties till the next budget. The Government was trying to minimise its oil dependency on imports by further exploration of oil within the country. "We are also talking to oil producing countries to see that they do not charge the Asian premium."

Significantly, when Mr. Chidambaram was replying to the debate, there were only 23 members present. Neither the Leader of the Opposition, L.K. Advani, nor the Deputy Leader of the BJP Parliamentary Party, V.K. Malhotra, was present during any stage of the discussion.

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