As part of steps to control inflation and augment availability of essential commodities, the government is considering re-allocating wheat in place of rice for the Targeted Public Distribution System (TPDS) and other welfare schemes.
The Communist Party of India (Marxist) charged the United Progressive Alliance government with making a "wrong diagnosis" of the causes behind price rise and said the steps announced to control inflation would in fact stifle the high growth rate.
The Reserve Bank of India on Monday said the steps initiated by the government in recent weeks are expected to help control inflation and inflationary expectations. Listing out the possible pressure points, including high oil prices that are expected to stay at elevated levels, the RBI report on Macroeconomic and Monetary Developments in 2007-08 noted that inflation risks due to petroleum prices remained incipient.
The BJP-led National Democratic Alliance on Thursday formed a human chain in Parliament complex to protest price rise while its leader L K Advani asked the government to quit and go for elections if it was unable to control inflation. Alleging that the government had 'failed' on the issue, Advani joined NDA members, including leaders like Rajnath Singh, George Fernandes and Manohar Joshi, in forming the chain.
The long-term answer lies in getting the central bank to focus on inflation.
The duty cuts and export restrictions imposed by the government to control inflation may only have a marginal impact, economists have said. The long-term solution, they say, is to boost agricultural production to enable the sector to ride out of the current slump.
"The Budget is in line with expectations. With the election year fast approaching, the Finance Minister has proposed a populist Budget aimed at using fiscal measures to boost growth and control inflation," said Anirudh Sarathy, analyst for StreetEdge Investments in San Ramon, California.
The CII perception of Indian economy is strong as incremental capital-output ratio at 4-fares is better than China and Brazil, the ICICI chief said.
The decline in inflation was broad-based across major commodity groups except housing and fuel and light.
Ajay Bagga, CEO, Lotus India Mutual Fund, feels the government should have taken timely action to control inflation. He feels that the recent fall is not a bull-market correction but a serious downturn that could last for about six to eight months. He said the government cannot afford to keep interest rates this high. It is likely to cut rates once the inflation moderates. Meanwhile the rupee will be allowed to appreciate to compensate for the rise in global commodity prices.
The Commerce Ministry is set to unveil the annual review of the Foreign Trade Policy on April 11. It would not be exports alone which would be the focus, but steps to ease imports are also likely to give a boost to supply of essential commodities.The government is facing political pressure from many quarters, including the Left parties, to check the rising prices within a couple of weeks.
The 'Ban Raj' is back. In an effort to rein in rising inflation, the Centre has banned export of all edible oils from the country.
Raghuram Rajan remains focused on a long-term inflation target of 4 percent.
The Reserve Bank of India (RBI), is in charge of monetary policy which has a big impact on liquidity and interest rates in the financial system. Let's look at some of the basics of monetary policy and how it impacts the average investor.
Prime Minister Manmohan Singh on Monday indicated withdrawal of tax exemptions to prevent their misuse.
Led by an unprecedented boom in domestic consumption, the country achieved an average GDP growth of 8.6 per cent over the past three years. For 2006-07, growth is forecast at 9.2 per cent, the fastest in 18 years.
The fact that the fiscal consolidation programme is on target - the fiscal reduction and the revenue deficit reduction - we are moving in the set direction, he said.
The Planning Commission on Tuesday made a case for increasing prices of petrol and diesel arguing that it was not a good idea to check inflation by keeping prices of petroleum products low.
Indians must be willing to swallow some bitter medicine during this phase when India is witnessing progressive growth, finance minister P Chidambaram said.
Besides addressing the inflation problem, the Budget is likely to focus on infrastructure and agriculture.
Ahead of the Union budget, Godrej Group chairman Adi Godrej on Monday said the government needs to move toward implementing a goods and services tax regime besides taking measures to control inflation.
Central pool of onions to be set up; offences under Essential Commodities Act to be made non-bailable.
Various global and domestic factors had a sizable impact on the performance of the Indian markets
'Urjit Patel's appointment is a right decision and in the interest of the country.'
'Is this the only way for India to become a $5 trillion economy?' 'When you have unused foreign exchange here, why borrow more dollars?'
RBI Governor Raghuram Rajan in his maiden policy review, however, eased liquidity though a reduction in the marginal standing facility rate, at which banks borrow from the central bank, by 0.75 per cent to 9.5 per cent.
Prime Minister Manmohan Singh on Thursday said while changes have been made in the country's economic policies, the basic thrust continues to be on self- reliance with high growth rate, removal of unemployment and controlled inflation as the goals.
RBI has kept interest rate unchanged at 8 per cent since January
The minister said she has already taken up the matter with the Finance Ministry.
'People who come from IMF-World Bank backgrounds have no dynamism at all,' Subramanian Swamy said.
The new Chief Economic Advisor Krishnamurthy Subramanian believes that more than unemployment, it is the quality of employment which needs to be focused on. In an interview with Arup Roychoudhury and Indivjal Dhasmana, Subramanian said that controlling inflation was the Modi government's biggest achievement.
His tweets led to his followers proclaiming that he was backing Patel's appointment
The surge in export, domestic demand and public spending in infrastructure projects might revive private investment during 2017-18.
'We all wanted a strong Centre with a decisive mandate from the people, to allow them to take bold decisions.'
'These three commodities have been chosen very well.' 'It is up to the state governments and central government to see how it is implemented.' 'The government has to do some hand-holding.'
Former Reserve Bank Governors do not seen any harm in central bank consulting the government before firming up monetary policy initiatives saying such an step would not amount to infringement on its independence.
'Implementation of GST would lead to the growth story of India'.
Slight recovery in growth is expected only in July-September.
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