Pawar Rules out Monetary Measures to Curb Food Inflation

Amid speculations that the Reserve Bank may squeeze money supply to rein in surging food prices, Union Agriculture Minister has said that monetary measures are not needed for taming food inflation, reported PTI.

“Not necessary,” Pawar was quoted as saying.

He was answering a question whether monetary measures were required to rein in food inflation, which stands at over 16 per cent.

The minister said that food prices would come down if there was an improvement in supply situation.

“In fact, if the (food) availability is improved, situation (food inflation) will automatically improve,” Pawar was quoted as saying.

Report said that in its monetary policy review on Friday, RBI is likely to draw out liquidity from the system to stop inflammation from spreading to manufactured items.

By drawing out excess money supply, RBI tames demand factors, which fuels expectations about future inflation, report said.

Pawar stressed that measures taken by government have cooled down prices of the sweetner.

“Fortunately, Indian industry is importing raw sugar in a big way. The government has allowed them to process anywhere in the country. That itself has resolved substantial problem,” he was quoted as saying.

He noted that retail sugar prices had come down but not in proportion to the decline registered in wholesale prices.

“Food prices have come down …sugar has come down to Rs 3,500 a quintal from Rs 4,000, but still at wholesale level, we are waiting (decline in prices),” he was quoted as saying.