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May 03, 2007 17:02 IST
Concerned over a high six per cent inflation, which is more than double at 12.6 per cent in case of primary commodities, Finance Minister P Chidmabaram said on Thursday policy measures would be intensified and supplies augmented to check the price line at the rate of 4.5 per cent.
"I am confident current inflation which is over six per cent since January 2007 will be moderated to 4.5 per cent with the combination of measures in the fiscal, monetary and supply side," he said in Lok Sabha while replying to the debate on the Finance Bill.
There are five primary reasons for the rising prices, including worldwide increase in prices of commodities like crude oil and metal, supply-demand mismatch of essential commodities such as sugar, wheat and pulses.
Besides, he said, large inflows of foreign direct investment and foreign institutional investors also led to increase in money supply, which in turn pushed up prices.
The Budget 2007-08 focussed heavily on agriculture sector, Chidmabaram said, adding that this was aimed at enhancing the supply of essential commodities to check the rising prices.
"We have not hesitated to provide finances to import food items to meet rising demand," he said.
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