New Delhi: Finance Minister Pranab Mukherjee
today said that Centre had done whatever was possible to blunt
inflation and it was for the states to take action against
hoarders and revamp the public distribution system to check
At the same time, he said shortage of supply of food
items like pulses and edible oil, in tandem with hardening of
international prices, had compounded the situation, yet the
government`s efforts have brought down food inflation from 21
per cent in December to 9.55 per cent now.
Replying to a debate on inflation in the Rajya Sabha,
Mukherjee said he is not passing the buck to the states for
controlling surging prices, but most areas like PDS and
enforcing the Essential Commodities Act lay with them.
"I shudder to think of a central mechanism to control the
distribution system in over six lakh villages," he said,
rubbishing the charges that the government is insensitive to
the plight of the poor.
The Finance Minister said no insensitive government takes
welfare steps like NREGA, providing right to education till 14
years, etc., initiated by the UPA regime.
He said revamping the PDS is primarily a responsibility
of states and has to be done by them.
The Centre cannot decide as to what stock of foodgrains
has to be kept in which shops, he said.
The power to enforce the Essential Commodities Act is
with the state government, he added.
The Finance Minister said the Centre, on its part, has
taken steps to blunt inflationary pressures and took credit
for bringing down inflation to 9.53 per cent during the week
ended July 24 from over 20 per cent in December last.
"In December, the index was 21.6 per cent. Now, it has
come down to 9.53 per cent (week ended July 24)... it is
because of certain steps that were taken (by the government),"
However, the House adopted a resolution asking the
government to take more steps to control inflation.
Mukherjee said despite the government exempting pulses
and crude edible oils from customs duty, their supply could
not increase much because private players did not find landed
prices to be as remunerative.
Mukherjee attributed this to rising global prices for
The Finance Minister asked states to lift the stocks of
imported edible oil and pulses for distribution through the
PDS, on which the Centre is giving subsidy to the tune of Rs
15 and Rs 10 per kg respectively.
On the monetary front, Mukherjee said the central bank is
monitoring the demand factors that fuel inflation and will
adjust rates, if found necessary.
RBI is taking steps in doses, in coherence with the
fiscal policy of the Centre, he added.
To a charge from CPI (M) leader Sitaram Yechury on how
the Centre can take credit for giving subsidy to petroleum
products when it has raised taxes on the same, the Finance
Minister said the government has to take care of its fiscal
He said he did not want to repeat the incident of 1991,
when India had to pledge gold for a few million dollars and
the then Indian Finance Minister had to wait at the doors of a
Finance Minister of the rich country to take his appointment.
He said states also get resources from the Centre`s tax
on petroleum products.
As much as 34 per cent of states` tax revenue comes from
petroleum products, he pointed out and asked states to support
bringing them in the ambit of GST so that these products are
not used as a milch cow.
The Finance Minister appreciated the NDA regime for
deregulating petroleum prices, which resulted in enhanced
refining capacity in the country.