The government today said the current fiscal may end with inflation of around 7 per cent, driven by moderation in demand side pressures and record foodgrain production this year.
This is due to the demand side pressures moderating, as a consequence of the calibrated withdrawal of the fiscal stimulus and the tightening of credit by the RBI, along with record foodgrain production this year, Minister of State for Finance Namo Narain Meena said. "...As a result, overall WPI inflation is likely to decline from December onwards and the current fiscal may end with headline inflation of around 7 per cent," Meena said in a written reply to the Rajya Sabha.
On the steps taken by the government to contain the rising inflation, he said, among other things, the import duties on pulses and edible oils (crude) have been reduced to zero. Besides, the exports of edible oils (except coconut oil and forest-based oil) and pulses (except Kabuli chana and organic pulses up to a maximum of 10,000 tonnes per year) has been banned, Meena said.
In addition, the Forward Markets Commission has suspended futures trading in rice, urad and tur dal. Stock limit orders were extended in the case of pulses, paddy and rice up to September 30, 2011, Meena said. Among other measures, the government also reduced duty under Tariff Rate Quota (TRQ) for skimmed milk powder to 5 per cent from 15 per cent for import of up to an aggregate of 10,000 tonnes in a financial year.
It also allowed import of 30,000 tonnes of milk powder and 15,000 tonnes of milk fat at zero duty to the National Dairy Development Board during 2010-11 under TRQ, Meena said. The government also reduced customs duty on crude oil and import duty on petrol and diesel, he said. "As part of the monetary policy review stance, the RBI has taken suitable steps with 13 consecutive increases in policy rates and related measures.
This is to moderate demand to levels consistent with the capacity of the economy to maintain its growth without provoking price rise. "As per the most recent announcement of the RBI on October 25, 2011, the repo rate and reverse repo rate have been revised to 8.5 per cent and 7.5 per cent, respectively," Meena said. In reply to another query, he said the headline wholesale price index (WPI) year-on-year inflation stood at 9.73 per cent in October.