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CII’s statement on WPI inflation

Food inflation is on account of a rise in price of potato, fruits and vegetables, onions and milk and eggs.

April 16, 2014 11:07 IST | India Infoline News Service
Demand in the economy is weak, as is evident from all indicators of growth. The Rupee has also strengthened, which has prompted the government to start reducing retail prices of petrol. Therefore, this rise in WPI inflation has to be attributed to supply side constraints in the agricultural side. Food inflation is on account of a rise in price of potato, fruits and vegetables, onions and milk and eggs.
 
The revival of inflation, especially of food prices, calls for supply side initiatives to raise agriculture productivity, including augmenting investment in agri infrastructure and improving supply side management, delisting perishables from APMC, encouraging FDI in retail which would boost agriculture production, etc. While CII has been raising these points for some time, we are yet to see significant actions on this front. Knowing how deep the impact of inflation goes in slowing down the economy, CII would urge that policy actions are swift and decisive on this front.
 
It would be unfortunate if the RBI decides to address supply side created inflation through demand constriction by using interest rate as a tool.


Chandrajit Banerjee, Director General, CII

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