ASSOCHAM on Saturday, 5th April 2008, predicted that it would continue to soar for next three to four months, and may even touch the 7.5 per cent mark."The Wholesale Price Index (WPI) based inflation rate which is already at the highest in the last three years, could even surpass the 7.5 percent mark," predicts ASSOCHAM President Venugopal Dhoot.
In order to check inflation, the Cabinet Committee on Prices (CCP) chaired by Prime Minister Manmohan Singh on Monday, decided to abolish import duty on all crude edible oils, including palm and soya, and banned the export of non-basmati rice and pulses to contain inflation. The Central Government also decided to raise the Minimum Export Price of basmati rice to 1,200 dollars per ton from 1100 dollars, to balance the demand " supply in the domestic market and to cut import duty on butter and clarified butter (ghee) from 40 per cent to 30 per cent, besides, the 15 per cent import duty on maize was abolished, applicable on import of up to five lakh tons. The CCP also advised states to impose limits on stocks of commodities under the Essential Commodities Act, besides asking steel producers not to raise prices. The study done by the business conglomerate also reveals that the Central Government's efforts to contain inflation will come start-yielding results by August when inflation is likely to fall at of four per cent.
Experts believe that after all possible measures taken by the government, now, everyone is waiting for Reserve Bank of India's (RBI) annual credit policy that will be revealed on April 29 2008. The industry body has asked the RBI to increase the interest rates, specifically the Cash Reserve Ratio (CRR) to restrain liquidity. The problem of inflation doesn't seem to be India-centric with China too struggling with a rising inflation rate of over nine percent.
According to analysts, the announcement of Sixth Pay Commission recommendations, and provisions for enhanced expenditure on social sectors in the Budget 2008-09 coupled with rising crude oil prices have also raised expectations about high inflation.