Kolkata: There is no sign in the economy
that excess liquidity is causing the current inflationary
pressures, Finance Minister Pranab Mukherjee said here on Thursday.
"I had a detailed discussion with the RBI and found that
there is no reason to believe that excess liquidity is
contributing to inflation in the economy," Mukherjee said when
asked about the steep rise in food prices.
However, he acknowledged that average food prices rose by
19-23 per cent even in the wholesale price index, which is
really high.
"Unlike instant coffee, there is no instant solution to
such vexed problems as inflation," Mukherjee said when asked
about government steps to curb the rising food prices, which
for the latest week climbed back to near 20 per cent level
after a dip in the previous week.
Mukherjee said the Government has decided to release
wheat, but declined to give further details. He also admitted
there are problems in the public distribution system which
makes it not much effective. But the lacunae can be removed
only by the states at the panchayat level. The Centre's role
here is not much, he pointed out.
Mukherjee also admitted that there is shortage of crops
and the rising minimum support prices have some role in the
complex issue.
Meanwhile, he ruled out the possibility of making any
commitment on phasing out CST which now rests at two per cent.
"There are divergent views on the method and quantum of
compensation by some states. In this situation it will not be
possible for new commitment on the CST phase-out," he said.
PTI
First Published: Thursday, December 31, 2009, 19:17