New Delhi: Inflation has risen to 1.21 per cent for the week ended October 10 from 0.92 per cent in the previous week.
The Prime Minister's economic advisory panel had on Wednesday, October 21, 2009 said that inflation may cross the six per cent mark by the end of this fiscal and managing food prices will be the biggest challenge for policy makers in the short run.
The PM's Economic Advisory Council (PMEAC), headed by former RBI Governor C Rangarajan, also cautioned policy makers against inflation contagion from global developments due to rise in oil prices and any further setback to the financial world.
"In India, given the strength of inflationary pressures in the first half of 2009/10, due in part to the drought and expectations of lower supply, it is easy to envisage a situation in March 2010, where inflation is higher than 6 per cent," Economic Outlook for 2009-10 released by the council had suggested.
"Inflationary pressures on the food front will be a major policy concern in 2009/10. In the short term, managing inflationary risks, particularly food price inflation, is the biggest challenge to policy makers," it had added.
The council said the weak monsoon rains and available acreage data suggest lower kharif output rendering the management of food inflation a severe challenge this fiscal.
"While the current weather conditions favour a strong rabi (winter) crop, the possibility of adverse weather conditions in rabi cannot be completely ruled out," it added.
It is a matter of comfort and strength that the country has an adequate supply of food grains in public stocks, of which about 18 million tonnes is rice, the council said.
It asked the government to have an appropriate policy response at protecting the rabi crops, strengthening the public distribution system and importing rice, if required.
It also suggested that the government and the RBI should spell out a clear time frame for withdrawing the fiscal and monetary stimuli to curb inflationary expectations.
In the medium term, the government should also look at addressing challenges facing the farm economy like low level of yield in major cereal crops and pulses.
Comments
0 comment