The Confederation of Indian Industry (CII) on Friday called for urgent steps to prevent the food inflation from staging a comeback, and also urged the Reserve Bank of India (RBI) to make a shift towards a more accommodative monetary policy stance to revive investment and propel demand.
"CII notes that headline inflation, which has eased to a nine month low of 4.68% in February 2014, has been on the downward trajectory since the last few months essentially due to a fall in food and fuel prices. There has been an appreciable drop in prices of vegetables, potatoes, onions, cereals, eggs, among others which are contributing to a drop in inflation rates," said CII Director General Chandrajit Banerjee in a statement.
"The moderation in inflation should induce the RBI to make a shift towards a more accommodative monetary policy stance to revive investment and propel demand especially as investment demand is declining and consumer durables are in the red. Besides, core inflation, which tracks demand side pressures in the economy, continues to be stable," he added.
He also said that to prevent food inflation from staging a comeback, CII has been emphasizing on the need for taking urgent steps to address supply side bottlenecks- by delisting perishables from Agricultural Produce Market Committee (APMC) Act, permitting farmers to sell their produce in the open market, selling excess stock of grain in the open market, encouraging the private sector to play a bigger role in grain trade-all of which would improve the productivity of agriculture and lead to a further decline in inflation.