New Delhi: Concerned over the current level of food inflation which stands at 9.5 percent, Finance Minister Pranab Mukhrejee termed this as ‘unacceptable’. He said that the government has taken several steps to bring the ‘unacceptable’ food inflation down further especially through enhancing supply of essential commodities.
 
Replying to the discussion on the General Budget 2011-12 in Lok Sabha on Friday Mukherjee said, "At the beginning of last year, food inflation was 20.2 per cent, and now it is 9.5 per cent. However, this figure is equally unacceptable."

Mukherjee said the high inflationary pressure, especially in food and some non-food articles, existed in other emerging economies also.

"I am not making any plea. This is not an excuse that because there is inflation in other areas there should be inflation in India also. It is not. But the fact of the matter is inflationary pressure is visible all over the world. It is not merely in our country," he said.

Linking food inflation to global developments, he pointed out that the surplus liquidity is being converted into commodity. "There are apprehensions. It appears to be the ground reality that surplus liquidity has been converted into commodity such as oil and food grain", he said.

Mukherjee said such a trend was also noticed in other essential commodities.

"These are the economic factors. We may try to wish them away but we cannot because the global linkage is here...” he said. Food inflation has been in the double-digits for most of this fiscal.

According to latest figures, it has, however, dipped to 9.52 percent for the week ended February 26.

The overall inflation continues to be above 8 percent mark since February 2010. The government is expecting that it would fall to 7 percent by March end.

The government has taken various steps in the Budget like special initiative for agriculture, supply chain management, promotion of coal chains among others, Mukherjee said.

He also expressed concern over the state of distribution network in the country including the PDS (Public Distribution System) for Below Poverty Line (BPL) families saying it was not up to the mark.

He said the government has received a number of suggestions from the expert group headed by Gujarat Chief Minister Narendra Modi on revamping the PDS and added "there are some suggestions which could be implemented."

GDP to grow at 9 percent

Allaying apprehensions that global events like high oil prices may impact growth, the Finance Minister exuded confidence that the economy would return to nine percent growth in 2011-12.

"We can and we shall (achieve nine percent GDP growth)," Mukherjee said.

"...In the year which we are coming to an end (GDP) is 8.6 percent. And therefore if I project that my GDP growth will be 9 percent, the figure is credible", he said.

Crude prices has become a big concern for the government as it is over USD 100 a barrel, mainly driven by political unrest in the Middle-East, first in Egypt and now in Libya.

The pre-Budget Economic Survey tabled in Parliament also projected the real GDP to grow by 9 percent (+/-0.25) in 2011-12.

As per the CSO data, Indian economy is estimated to grow by 8.6 percent in the current fiscal.

Indian economy seems to have reverted to the high growth trajectory as can be seen by the 8.9 percent growth registered in the first half of the current fiscal.

However, as per the latest CSO data, in the third quarter (October-December), the country's Gross Domestic Product (GDP) grew at 8.2 percent.

The Indian economy had grown at a rate above 9 percent for three consecutive years, starting 2005-06, before the global financial meltdown brought it down to 6.8 percent in 2008-09.

In order to help the industry tide over the impact of the global financial crisis, the government came up with three stimulus packages giving up about Rs 1.86 lakh crore in revenue.

The stimulus packages, which included tax cuts and raising public expenditure, helped the Indian economy to recover fast.

In the last fiscal, Indian economy registered a growth rate of 8 percent.

(JPN/Agencies)