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Inflation to moderate further on govt measures: Mayaram

LiveMint logoLiveMint 14-06-2014 PTI

New Delhi: Expressing satisfaction over the moderation in inflation, finance secretary Arvind Mayaram said on Saturday that the price situation would ease further with recent measures taken by the government as well as growth impulses.

Much of the rise in prices has been in food items, he said, adding that there is a need to develop the commodity futures market with an aim to provide price stability and enable the government deal with inflation more “effectively”.

Asked if the falling trend in inflation is positive for the economy, Mayaram said: “Of course, this is the trend for a while now, and this (inflation) will continues to go south. I am very confident that with the measures that the government is now taking and growth impulses that we are seeing in the economy, inflation must come down,” he told reporters.

Retail inflation touched a three-month low of 8.28% in May from 8.59% in April due to subdued prices of vegetables, cereals and dairy products.

Highlighting the key role that commodity futures market could play in controlling inflation, Mayaram said: “The country has gone through the phase of an almost entrenched inflation for over 2-3 years. And much of it is driven by food prices. So it is important that we develop this market.”

The commodity futures market should be developed in “a manner that it is able to provide some price stability over a longer period of time and to enable the government deal with inflation more effectively and efficiently,” he added.

Besides, there is a need to boost the food processing industry despite the country being the world’s largest producer of vegetables and fruits, he said. There is also a need to develop long-term export market in the agriculture sector, he added.

Emphasising on the requirement to develop depth in commodities market for better price discovery and checking price manipulation, Mayaram said the government is determined to address all issues, including commodity transaction tax, strengthening sector regulator FMC, among others.

He also said that the forecast of below normal monsoon is not “alarming” as of now but the government is keeping a watch. He said the country has strong foodgrains reserves to tackle any shortfall in production due to erratic rains.

“The Met department prediction shows a little less rain than average. It is not alarming at this point of time but we have to watch. We believe that we have a very strong reserves position,” Mayaram told reporters on the sidelines of an event here.

According to official data, state-run Food Corporation of India (FCI) held a stock of 41.6 million tonnes of wheat and 11.4 million tonnes of paddy till June.

There are growing expectation of below normal monsoon due to the El Nino effect this year, affecting agriculture production and is also likely to impact food prices. On 9 June, the Met department in its revised forecast, has predicted monsoon to be below normal at 93% from 95% of the long-term average. PTI

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