New Delhi: The rise in prices of essential
commodities is due to "wrong" policies followed by the Centre
based on a "wrong diagnosis" of what is causing inflation, the
CPI(M) has said.
The party was also critical of the new monetary policy
of RBI saying it would not contain inflation and "dampen" the
rate of economic recovery.
Noting that price rise was partly caused by deficit in
foodgrain production due to drought and floods, senior CPI(M)
leader Sitaram Yechury said "but the rate of the rise in
prices is much higher than can be explained by a deficit in
the availability of foodgrains.
"Much of the current inflation in essential
commodities is due to the wrong policies followed by this UPA
government based on a wrong diagnosis of what is causing such
inflation," he said.
Terming as "fallacious" the presumption behind the
policy that inflation was being caused by more money in the
hands of the people, the CPI(M) leader said inflation was
rather being fuelled by high food prices and not by people
demanding more and supply not being matched with the increased
demand.
"Shorn of all technical details involving interest
rates and the rates at which banks can borrow or lend, in
common terms, the measures announced by the RBI will reduce
the amount of money available for lending in the banking
system by Rs 36,000 crores," he said in an editorial in the
latest issue of CPI(M) organ 'People's Democracy'.
Clearly, the monetary policy measures announced by the
RBI "will not be able to contain this inflation primarily
because the diagnosis of the causes for this run-away
inflation is faulty", he said.
PTI
First Published: Friday, February 05, 2010, 18:36