Finance Minister P Chidambaram, who in his Budget speech proposed anti-inflationary measures like ban on futures trading in wheat and rice, on Thursday asked the industry to hold the price line to help the government contain rising inflation.
"I will urge the industry to hold the price line. I will ask them to cooperate in the fight against inflation" he said in a customary post-Budget interaction with the industry.
He said inflation could be moderated through fiscal steps like duty cuts announced in the Budget yesterday, monetary steps undertaken by the Reserve Bank of India and supply side augmentation.
Chidambaram said the price line augmentation is the area where he needs industry support.
"Supply side must be augmented and price line to the extent possible must be be held" he said, adding that spurts of inflation is not uncommon in India.
He said in 1998-99 inflation was around 7 per cent for 11 weeks and in 2000-2001 inflation was over 6 per cent during 48 out of the 52 weeks.
"In 22 of those weeks, inflation was over 7 per cent and in 12 of those weeks it was 8 per cent," he added.
Elaborating further, the Finance Minister said when "we came to power in 2004, inflation was over 6 per cent during close of May and we moderated it to 3.98 per cent. This inflation can also be moderated."
Inflation, which touched over a two-year high of 6.73 per cent for the week ended February 3, fell back to 6.63 per cent the following week but still remains far above the RBI's tolerance level of five to 5.5 per cent.
The price rise, driven by increase in the cost of food and raw materials, have especially hurt the country's poor.
In his Budget speech on Wednesday, Chidambaram tried to strike the right notes with regard to inflation control and concern for the aam aadmi (common man).
He reported that the Forward Markets Commission had banned futures trading in wheat and rice, and introduced a dual taxation scheme for cement (pegged to a retail price of Rs 190 per bag of 50 kg).
There were no big-ticket reform measures, and the changes in taxes left most people cold as some substantial giveaways had been anticipated.
