Supply side issues adding to inflation: FM

KALABURAGI: Union Finance Minister Nirmala Sitharaman on Wednesday said seasonal supply side problems add to inflation and that they are being monitored continuously with efforts being made to bring down prices of essential commodities.

Highlighting that efforts have also been made to bring down fuel and natural gas prices, she said these are imports coming India and the prices are high in the global market, due to the impact of Covid and Russia-Ukraine war.

“On prices, since November 2021, when the Prime Minister himself has instructed us to reduce the excise duty on fuel, as a result before Deepavali one announcement was made. Then sometime in June 2022, again we reduced the excise duty further. As a result, price of fuel came down somewhat,” Sitharaman said during a press conference here.

“But when we are speaking about fuel or natural gas, we need to understand one thing: these are products which are imported, and particularly after Covid and particularly even more after the war between Russia and Ukraine, the prices have been going up and in spite of that, we are importing. Central government’s bit (domain), which is the tax excise, has been brought down. Karnataka also reduced the price in November 2021.”

The Union Minister was responding to a question on price rise and measures being taken by the government.

Noting that the government closely monitors the supply side issues of essential commodities, whether it is edible oil or vegetables, Sitharaman said: “We have cut down the customs duty so that the imported edible oil can come, so that the edible oil prices can be brought down.”

There are a Group of Ministers (GoM) who sit and look at essential commodities and prices, and therefore continuously monitor the release of stocks. “When there was an increase in the market price of rice, we released rice from the buffer stock.”

“Efforts are continually being made by the Central government to make sure the prices are brought down. That is why the CPI (Consumer Price Index ) has come down from 6 to 5.8 and 5.7 and so on (all in per cent). So seasonal supply side problems add to inflation which we have to continuously monitor and continuously make efforts to bring down the price,” she added. Sitharaman hit out at Congress and its leader Siddaramaiah for the latter’s attack on BJP.

Siddaramaiah had targeted BJP and Union Home Minister Amit Shah for his statement claiming that the May 10 Assembly election is about entrusting the future of Karnataka into the hands of Modi.

Chennai: India’s GDP growth will be at 6 per cent in FY24, said credit rating agency Acuite Ratings and Research. Acuite said despite the global macro economy remaining characterised by contradictions and financial system instability risks coming to the fore, the Indian economy continues to demonstrate strength and stability. Most lead indicators at the start of 2023 continue to display resilience, with incremental data Feb-23/Mar-23 faring better than Jan-23. “Acuite expects GDP growth to moderate but still remain healthy at 6.0 per cent in FY24,” the report said. There is a clear distinction emerging with respect to the strength of domestic demand — which continues to display vigour, as against the impact of slowing external demand getting captured in reduced run-rate of merchandise exports (albeit in part also due to moderation in commodity prices), waning export orders within PMI and services exports coming off their Dec-22 peak (though still above trend). “Looking ahead, challenges for domestic growth are expected to intensify in FY24 owing to slowdown in global growth, with the added dimension of tightness in credit conditions post the banking sector turmoil; climate risks especially a warmer summer along with El Nino risks; private capex remaining uneven.