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Price rise gets out of hand

Special Correspondent

‘Maintaining economic growth would be a serious challenge’

NEW DELHI: Corporates took the latest inflation with a sense of concern, observing that it posed a serious threat to the strong economic growth.

The apex chambers — the Associated Chambers of Commerce and Industry of India, the Confederation of Indian Industry, and the Federation Indian Chambers of Commerce and Industry — in their separate reactions said the inflation for the week ended June 7 had reached the ‘concern zone’ and ‘poses a threat to the economic growth.’

“Inflation is not only a concern for the government but also a concern for the industry... Many things seem to have gone beyond its hands,” Assocham President Sajjan Jindal said in a statement.

The CII said that the unabated rise in prices, though a reflection of global trend, “reduces the space for fiscal and monetary policy manoeuvrability, without seriously impacting growth.”

Serious challenge

FICCI said that maintaining GDP growth would be a serious challenge before the government and “the prospects of strong economic growth as seen in the past would certainly take a hit.”

However, the chambers said the double digit inflation was anticipated in the backdrop of increase in fuel prices at the retail level announced by the Government on June 4.

“Certainly we would hope that inflation management would not overlook growth imperatives, and from that point of view the fiscal and monetary policy would have to be very well managed,” CII President K. V. Kamath said.

He felt that global attention “now needs to be galvanised on the price issue, which has the potential to seriously damage the growth prospects of most large economies.”

“Hike in cost of domestic inputs would impact exports of traditional sectors like handicrafts, textiles, leather, marine products and agro-processed,” FIEO President Ganesh Gupta said in a statement.

He said the double digit inflation would give a serious blow to exports and affect competitiveness of Indian exporters in the global market.

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