Responding over the harsh criticism of its left ally over the issue of rocketing prices of the all-essential goods for common people, the UPA Government led by Congress on Monday tried to curb inflation rate by scrapping import duties on edible oil and barred to export non-basmati rice with immediate effect.
Interacting to the media, a government spokesperson said today that the Union Cabinet today has decided in its meeting to hamper the spiralling prices of eatable food products by pulling off the complete import duties on crude cooking oils and to checking export of non-basmati prices.
Government has also extended the ban-term of pulses for the next year that was ending today. The import duty imposed on maize has also been declined to zero percent from present 15 percent.
A cabinet meeting has been called on the report of Wholesale Price Index (WPI) that had come on the last week reporting about the inflation rate that jumped to 13-month high of 6.68% in the second week of March. As per WPI reports, the price increased in energy, food and manufactured products were the main reason of inflation.
The Communist Party of India (Marxist) has warned its ruling ally Congress against its failure of controlling the surging inflation rate by launching a national wide action by April 15 while on the other hand, BJP, the main opposition party in the parliament has also threatened the government to call a country-wide protests from April 7, accusing it of being insensitive with the need of poor and lower middle-class society of India.
Initiating the action of curbing the inflation rate, Finance Minister P Chidambaram after the cabinet meeting has said that government will take all essential steps to curb the inflation rate. At the immediate effect, government has ordered to check the export of non-basmati rice viewing the acute shortage and rising price of rice in the country.
The export price of Basmati has also been hiked from $1,100 to $1,200, while government has also cut the custom duty on butter and ghee, or clarified butter, to 30% from 40%. The current price of soybean and palm oil will prevail until further notice.
The government has also ordered to decrease import duty on refined edible oil (covering palm oil, sunflower oil, soybean oil, coconut oil, groundnut oil as well as other edible oils) from 27.5% to 7.5%, while import duty on hydrogenated vegetable oils and fats has been slashed by 7.5%.
Despite slashing prices on the food products, government is still not sure about to slow the rolling inflation and expects to cut the duties on steel prices which prices is going high and the steel makers are threatening the government to hike the prices if sufficient support will not be provided to them.
The decision on the steel prices has not been taken as Union Steel Minister Ram Vilas Paswan is still in abroad. But government spokesperson has assured to steel makers that the decision on prices of steel and ore will be taken soon after the arrival of the Steel Minister. Finance Minister has appealed to steel makers to restrain the price till the new decision taken.
The Governor General of Reserve Bank of India, Dr. Y V Reddy has also not pleased with spiralling inflation rates and fears to hike Cash Reserve Ratio if the inflation rate would not come down. This will affect the banks’ liquidity badly.
“Inflation is unacceptably high...we are very, very concerned...we are in full readiness to take appropriate action to contain inflation," said Y V Reddy over rising inflation rate while informing the media about the next annual monetary policy that will be announced on April 29.
Government is in huge pressure overseeing the next assembly election that is schedule to be held nearby a dozen states in the year while the national general election is scheduled by May 2009.
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