Inflation poses serious threat to growth momentum: Manmohan Singh

Friday, February 4, 2011

NEW DELHI - The Prime Minister, Dr. Manmohan Singh, on Friday said India’s high inflation posed a “serious threat” to the country’s growth momentum, and was driven by supply-side shortages.

Addressing the 2nd Annual Conference of Chief Secretaries of States here, Dr. Singh said: “Our economy has been on a high growth trajectory for the past few years. We weathered the global financial crisis relatively well and we have reason to believe that we will do much better in the coming years as well. But, inflation poses a serious threat to the growth momentum. More importantly, it affects the poor and the vulnerable disproportionately harder.

“A year ago the primary concern was the rising prices of cereals, pulses, edible oils and sugar. These were being pushed up owing to the drought of 2009. These tendencies were reined in successfully due to additional releases through the public distribution system, augmentation of supplies through imports and curbs on exports and a determined effort to increase production,” he added.

He further said that the lasting solution for food price inflation lies in increasing agricultural productivity and production not only of cereals but also of pulses, oilseeds, vegetables and fruits and augmenting the supply of milk and milk products, poultry, meat and fish.

For improving the availability of various commodities to meet the higher levels of domestic consumption, Dr. Singh said: “There is a need for a paradigm shift in our institutional arrangements.”

“Since we have no control over the prices of imported goods, our ability to stabilise prices depends crucially on our ability to control the prices of non traded goods and services,” he added.

He further said the functioning of the Agricultural Produce Market Committee Acts needs to be reviewed on an urgent basis.

Emphasising that the public distribution system needs to be strengthened, Dr. Singh said: “Supply chains need to be strengthened and these need to be dovetailed with organized retail chains for quicker and more efficient distribution of farm products and more remunerative prices for our farmers.

While the Central Government will continue to provide substantial support in this direction, Dr. Singh urged each state to work out a suitable plan of action suited to its requirements and its capabilities. (ANI)

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