Chidambaram admits inflation a problem; willing to take more steps

[K.Karthik Raja]

Chidambaram admits inflation a problem; willing to take more steps
Friday, Jun 6

NEW DELHI - Finance Minister P. Chidambaram today conceded India's
spiralling headline inflation was a problem and the government is
willing to
take more steps to rein in prices.
"I would be the first to admit that we have not overcome all our
problems
notwithstanding the many successes under the United Progressive
Alliance
government... We admit inflation is a problem," Chidambaram said in a
letter
to the principal Opposition, the Bharatiya Janata Party.
However, Chidambaram's letter rebutted the saffron party's
allegations
that the government has bungled on the price situation.
According to data released today, India's headline inflation rate
for week
ended May 24 has soared to a 45-month-high of 8.24% from 8.10% in the
previous
week.
The finance minister said the current inflation is due to a
relentless
rise in global crude oil prices.
"The rise (in crude oil prices) has also triggered a rise in
commodity
prices."
The average price of Indian crude oil basket in 2007-08 (Apr-Mar)
was a
little over $79 a barrel. Since the start of the current financial
year in
April, has averaged nearly $114.
Chidambaram said food prices have come under pressure due to
diversion of
food crops like maize, sugarcane and palm oil for the manufacture of
biofuels.
He said the economy has grown at an average of 8.9% over the last
four
years and fiscal deficit has been brought down to 2.8% in 2007-08.
The government aims to further lower the fiscal deficit to 2.5% of
gross
domestic product in the current financial year.
"The government has raised the tax to GDP ratio to 12.5% in
2007-08 and it
is expected to reach 13% this financial year," Chidambaram said.
He expressed confidence that the government will not only overcome
current
difficulties but will also ensure robust and inclusive growth along
with price
stability in the medium- to long-term. End
.