Finance Minister P Chidambaram on Wednesday said that the government will contain the current inflation in India by taking steps both on the fiscal and monetary sides.
Chidambaram, who delivered the keynote address on the opening day of a two-day 'India Investment Forum' at the Waldorf Astoria hotel in New York on Wednesday, told journalists during a press conference that the government will continue to take measured steps to contain inflation. "The key word is measured steps both on the fiscal side and the monetary side as the situation demands," he said.
Chidambaram said that on the fiscal side the government has cut customs and some excise duties, some excise duties and has given up some revenues to moderate inflation. On the monetary side, he said, RBI has hiked the CRR, adding that the central bank has also taken steps to suck an excess liquidity.
The minister blamed the current level of inflation on the high oil prices. "It has contributed about 2.8 to 3 per cent of the current inflation and that is something beyond our control," Chidambaram said.
Chidambaram said he was unhappy about the rise in oil prices. "We think that these rises are not justified and they are not sustainable in the long run," he said. "I was told by highly informed people as well as high official of the administration that there is still a surplus in the supply of oil and therefore in their view these prices, also, are not sustainable in the long run," he said.
He said these high prices are hurting India like in any other country. "This is likely to retard growth to some extent," he said.
"More immediately our calculations show that a five dollar increase per barrel in crude oil prices pushes up inflation by 1.4 per cent in India," Chidambaram said.
Chidambaram said that so far the government have absorbed the cost of high oil prices, adding that the last time the government raised petrol and diesel prices was on July 31 this year. "Since then we have restrained ourselves," he informed.
"I can only fervently hope that oil prices will moderate," he added. In response to a question he said he did not know if there was any move on the part of the Indian government to raise the oil prices once again this month.
"I do not know what the oil ministry wants to do because I have been here for the past six days. I will find it out when I go back," he said.