Time not ripe for rate hike: Anand Sharma
Commerce and Industry Minister Anand Sharma has opposed monetary tightening, saying fund flows to the industry have not caused food inflation.
New Delhi: Ahead of the third quarter monetary policy review by the Reserve Bank later this month, Commerce and Industry Minister Anand Sharma has opposed monetary tightening, saying fund flows to the industry have not caused food inflation.
"If you want the industry to expand and exports to be competitive, they must get credit on easy terms and low interest rates," Sharma told PTI, adding there is no need for the monetary tightening at this point of time.
Asked about the concerns on spiralling inflation, particularly of food items, he said, "there is no spill-over effect of credit to inflation. What should businesses do, should they shut down or stop expanding? Food inflation has nothing to do with bank credit to business."
Food inflation stood at 17.28 per cent for the week ended January 2, compared to 18.22 per cent in the previous week.
The Reserve Bank will announce the third quarter monetary policy on January 29.
The Commerce and Industry Minister said, "I think there is also speculative build-up when it comes to food inflation in some of the commodities because there is enough grain available in the country. Both rice and wheat procurement is good."
He added, "We have shortage for some items only like edible oils and pulses, which is being imported. I am worried about pulses and edible oils."
Sharma, who is also a member of the empowered group of ministers on food prices which meets regularly to take stock of the situation, said, "we hope food prices will come down. Inflation is mainly resulting from sugar, onion and vegetables. We are also optimistic about the Rabi crop."