‘We need to look at the Essential Commodities Act and put in place strict measures and special courts to stop hoarding and black marketing’
NEW DELHI : The government is committed to break the “vicious cycle” of high inflation and high interest rates, Finance Minister Arun Jaitley said in his pre-Budget meeting with finance ministers of states and union territories.
“Long inflationary trends have adversely impacted the food and nutritional security of the common man. We are committed to breaking this vicious cycle of high inflation and high interest rates,” Jaitley said in his speech to the states’ finance ministers.
Inflation rate based on Consumer Price Index (Combined) had risen to a three-month high of 8.59% in April from 8.31% a month ago, while inflation rate based on Wholesale Price Index had declined to 5.20% in April from 5.70% a month ago.
With manufacturing sector posting an abysmal performance in the financial year ended March, the investment cycle has been disturbed, the finance minister said. The slowdown in growth and high inflationary pressures pose challenge to the macroeconomic environment, Jaitley said.
India posted a sub-5% rate of growth in the financial year ended March, with gross domestic product growing at 4.7% in 2013-14, below the Central Statistics Office’s advance estimate of 4.9%. Industrial output slumped to (-)0.1% in 2013-14, a record low in the current series.
Jaitley said the Centre and states must complement each other in managing the economy and the fiscal policy. The government would like to evolve a mechanism which addresses the structural issues that create supply bottlenecks, Jaitley said, adding cooperation of states is needed to bring down food prices along with strict measures to stop hoarding.
“…we also would like to evolve a mechanism which addresses the structural issues that create supply bottlenecks. We need to look at the Essential Commodities Act and put in place strict measures and special courts to stop hoarding and black marketing,” he said.
On the issue of Food Security Act, Jaitley said, the need of the hour is to implement the law in a cost effective and efficient manner. The finance minister also sought views from states on decentralised food procurement. The government is committed to reviewing the public distribution system,
Jaitley said, adding that restructuring of Food Corporation of India for greater efficiency in delivering food grains is high on the government’s agenda.
He said the need for a Single Agriculture Market and real time information dissemination on prices to farmers and consumers are areas which need to be