The food inflation was at 11.40% during the week ended July 31, 2010, while the overall inflation was 10.55% in June this year.
Under attack for rising prices, prime minister Manmohan Singh today said the government was making every possible effort to control "high inflation" and insulate poor from its adverse impact.
"I know that in the last few months high inflation has caused you difficulties. It is the poor who are the worst affected by rising prices, especially when the prices of commodities of every day use like foodgrains, pulses, vegetables increase.
"It is for this reason that we have endeavoured to minimise the burden of increased prices on the poor," Singh said while speaking from the ramparts of the Red Fort on the 64th Independence Day.
The opposition BJP and the Left parties have attacked the government over surging food prices. With Parliament disrupted for a week on the issue, an understanding was reached between the two sides following which a resolution was adopted in the two Houses asking the government to take further steps to control price rise.
Singh refrained from giving any time frame for containing inflation. He had last month said, while addressing the National Development Council, that inflation would come down to around 6% by December this year.
"Today I do not want to go into the detailed reasons for high inflation. But I would certainly like to say that we are making every possible effort to tackle this problem. I am also confident that we will succeed in these efforts," he said.
The overall inflation has been over 10% for five consecutive months till June, while food inflation stood at 11.40% for the week ended July, 31.
He, however, said that increase in support prices for farmers for wheat and paddy has resulted in increase in food prices in the open market.
"The support price for wheat was enhanced to Rs1,100 per quintal last year from Rs630 a quintal in 2003-04. In paddy, this increase was from Rs550 per quintal to Rs1,000 per quintal. But one effect of providing higher prices to farmers is that food prices in the open market also increase," he added.
He said though agricultural performance has improved substantially in the last few years, it is still far from the goal of four per cent growth per annum.
Singh said that high remunerative prices were provided to farmers so that they were encouraged to produce more.
"Our government wants a food safety net in which no citizen of ours would go hungry. This requires enhanced agricultural production which is possible only by increasing productivity," he said.
He, however, defended hike in prices of petrol and other petroleum products saying "if this had not been done, it would not have been possible for our budget to bear the burden of subsidy and our programmes for education, health and employment of the poor would have been adversely affected."
The government has increased prices of petroleum products much less than the rise in crude oil prices in the global markets.
"It is obvious that any person or institution cannot spend more than his income over a long period of time, even if it is government. It is our responsibility that we manage our economy with prudence so that our development is not affected adversely in the future because of high debt," he said.
In June, the government raised petrol prices by Rs3.50 per litre while deregulating it. It also hiked the prices of LPG by Rs35 a cylinder, diesel by Rs2 a litre and kerosene by Rs3 a litre.
Singh said that the government took right decisions at right times which saw the country performing well on the growth front despite drought like situation in many parts of the country and global financial crisis last year.
"We were also affected by the global economic slowdown. I am happy to say that we have acquitted ourselves well in these difficult circumstances. Despite many problems, the rate of our economic growth has been better than most of other countries in the world. This shows strength of our economy," he added.
Indian economy grew by 7.4% last fiscal, after economic expansion slowed down to 6.7% during 2008-09 due to the effect of global financial meltdown. This fiscal, economy is projected to grow by 8.5%.
"Today, India stands among the fastest growing economies of the world...Our country is viewed with respect all over the world. Our views command attention in international fora," he said.
The prime minister, however, outlined some areas of concern especially deficit in the physical infrastructure that affected economic development adversely.
Noting that there is a shortfall in the supply of electricity to industries, Singh said, "Our roads, ports and airports are not of world standards. We have been trying to increase electricity production and improve roads, ports and airports."
The resources required to create good infrastructure are difficult for the government alone to mobilise, he said, asking the private sector to involve in its efforts.
He said that to achieve goals, the government did not need any new scheme or programme to be launched. "However, we do need to implement the schemes we have already started more effectively, minimisisng the chances of corruption and misuse of public money."
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