19 Apr, 2008, 1644 hrs IST, PTI
NEW DELHI: Inflation will ease with good monsoon and the need to take short-term measures to control prices will gradually go away, said an official in the Prime Minister's Office.
"My guess is that with good monsoon, we will see some easing of food price inflation. And, therefore, the temptation of quick-fix price control will go," said Prime Minister's media adviser Sanjaya Baru, while dubbing import duty cuts and ban on exports of certain commodities as short-term measures.
The government and the Reserve Bank has taken a host of fiscal and monetary measures to check inflation, which is hovering at 7.14 per cent now, down marginally from a 40-month high of 7.41 per cent on March 29.
Inflation has mainly been driven by high prices of food and some manufactured goods.
To reign in high prices, the government banned export of non-basmati rice and pulses and reduced duties of refined edible oil. The RBI too increased the mandatory deposits that banks maintain with the central bank to 8 per cent in a bid to curb money supply.
Pointing out that the country is increasingly becoming a food importing nation, Baru said, "It would be in the interest of India to favour continuation of farm subsidies by the US and the European countries so that import prices remain low."
India, however, is opposed to developed countries subsidising their farm sector.
Baru, who made these comments at the IISS-Citi India Global Forum here, clarified that he was speaking in his personal capacity and not as spokesperson of the government. "It is for the Commerce Ministry to take a view of the issue", he added.
Source: ET
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