Govt says it will take more steps to contain inflation

Admitting that high prices of food and fuel remain a concern, the government today said it will seek to contain food inflation through measures for improving productivity of various agriculture products.

In its annual 'Report to the People', the UPA government today said that it would also seek to minimise the impact of high fuel prices on 'poor and vulnerable' of the society.

In the report card, Prime Minister Manmohan Singh said that the government has taken steps to increase productivity and production of various agriculture commodities to contain inflation and intends to take more steps in the future.

"Food inflation was a major concern in 2010-11," Singh, said, while adding that various measures were taken by the government to address the problem.

He listed out steps like a selective ban on exports and future trading in foodgrains, zero import duty on select food items, import of pulses and sugar by public sector firms, distribution of important pulses and edible oils through PDS and release of higher quota of non-levy sugar.

He added that fiscal stimulus was being rolled back and RBI had also taken steps to restrict excess liquidity.

"As a result, inflation in cereals and pulses declined from 11.05% in April 2010 to 2.32% in March 2011," Singh said.

"However, the long term solution to the problem lies in increasing productivity and production in a diverse range of agriculture commodities. We continued our efforts in this direction in 2010-11 and intend to do more in the future," Singh noted.

On price situation, the report card said that the overall year-on-year WPI inflation fell significantly to 8.98% in March 2011, from the peak of 11 per cent in April 2010.

"Several measures announced in the 2011-12 budget to improve supply in the medium-term are expected to address the imbalances in the agriculture sector. Fuel prices, however, remain high, reflecting global trends," it added.

The government said that food price inflation still remained a major concern. Although the prices of some cereals, sugar and pulses declined over the year, the prices of protein sources such as milk, eggs, meat and fish continue to remain high reflecting structural demand-supply imbalances, it added.

In order to contain food inflation, states were also empowered to act against hoarders of food items, in addition to steps taken by the central government and RBI, it added.

The government said that fuel inflation also remained high during the year, but it was committed to ensuring availability of cooking fuels to the common man at affordable prices.

While prices of petrol and diesel will be market determined, the overall impact on the poor and the vulnerable was being minimised, it said.