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More steps soon to curb price rise

Ashok Dasgupta

Government watching the situation carefully, says Chidambaram

NEW DELHI: The government on Friday hinted at more steps to arrest the runaway surge in prices as the rate of inflation almost held steady at 7.82 per cent for the week ended May 10 compared to 7.83 in the previous week, despite a fall in the prices of pulses, fruits and vegetables.

The galloping global prices of crude oil pegged at $ 135 a barrel may necessitate another round of hike in petro products prices to bail out the oil marketing companies (OMCs).

“We are watching the situation carefully. We will take further measures if needed,” Finance Minister P. Chidambaram told journalists during a Cabinet briefing here on the farm loan waiver guidelines, even while Petroleum Secretary M.S. Srinivasan noted that a hike in fuel prices was “inevitable.”

Manmohan’s assurance

At a function on the UPA government’s completion of four years in office on Thursday, Prime Minister Manmohan Singh had also remarked that he would not let the state-owned OMCs suffer.

Making matters worse for the government is the fact that the revised WPI (wholesale price index) data for the week ended March 15 has revealed that the rate of inflation was actually 8.02 per cent, much above the provisional estimate of 6.68 per cent. In effect, while the price spiral was above eight per cent at the close of 2007-08, the apprehension is that the current provisional estimates during the new fiscal may well soar over 10 per cent on final revision.

Uncertainty

In the wake of uncertainty over the government effecting a fuel price hike which may force it and the Reserve Bank of India (RBI) to take some more fiscal and monetary measures, the Prime Minister’s Economic Advisory Council Chairman C. Rangarajan said inflation was likely to remain high for the next 3-4 months.

“It would show a tendency to decline at around six per cent. Inflation may reach even 5.5 per cent by the end of this fiscal,” Dr. Rangarajan said on the sidelines of a function here.

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