GOVERNMENT OF INDIA
Ministry of Finance
DEPARTMENT OF ECONOMIC AFFAIRS

RAJYA SABHA
UNSTARRED QUESTION NO. 687
TO BE ANSWERED ON NOVEMBER 29, 2012 / AGRAHAYANA 8, 1934 (SAKA)

 QUESTION
Steps taken to Curb the High Level of Inflation

687. SHRI RAJEEV CHANDRASEKHAR:

Will the Minister of FINANCE be pleased to state:

(a)   the trends in inflation in the last three years, year-wise;

(b)   whether Government is aware of the successive growth in inflation for the last several quarters, despite several announcements by Government that inflation will decline; and

(c)    if so, the steps being taken by Government to curb the high level of inflation in the country?

ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI NAMO NARAIN MEENA)

(a) The headline inflation measured in terms of Wholesale Price Index was 3.81% in 2009-10, 9.56% in 2010-11, 8:94% in 2011-12 and 7.63% in April- October, 2012.

(b) The factors contributing to the persistence of inflation, however, have been changing over time. Higher international prices of tradable including crude petroleum change in dietary patterns leading to structural demand-supply mismatch for protein rich items and increase in prices of cereals and pulses, partly on account of increase in MSP, have contributed to inflation.

(c) Government has been conscious of the need of containing inflation and has taken several administrative and fiscal measures in this regard. Details of the steps taken by the Government are given in Annex 1

 Annex 1

Measures taken and proposed by the Government to contain price rise

1. Fiscal & Administrative measures

• Reduced import duties to zero – for wheat, onion, pulses, crude palmolein and to 7.5% for refined & hydrogenated oils & vegetable oils.
• Duty-free import of white and raw sugar was extended up to 30.6.20 12; presently the import duty has been kept at 10%.
• Banned export of edible oils (except coconut oil and forest based oil) and edible oils in blended consumer packs up to 5 kg with a capacity of 20,000 tons per annum and pulses (except Kabuli chana and organic pulses and lentils up to a maximum of 10000 tonnes per annum).
• Imposed stock limits from time to time in the case of select essential commodities such as pulses, edible oil, and edible oilseeds and in the case of paddy and rice for specific seven states up to 30.11.2012.
• Ban on export of onion was imposed for short period of time whenever required. Exports of Onion were calibrated through the mechanism of Minimum Export Prices (MEP).
• Maintained the Central Issue Price (CIP) for rice (at Rs 5.65 per kg for BPL and Rs 3 per kg for AAY) and wheat (at Rs 4.15 per kg for BPL and Rs 2 per kg for AAY) since 2002.
• Suspended Futures trading in rice, urad, tur, guar gum and guar seed.
• To ensure adequate availability of sugar for the households covered under TPDS, the levy obligation on sugar factories was restored to 10% for sugar season 2011-12. .
• Government allocated rice and wheat under OMSS Scheme.
• Resumed the scheme for subsidized imported pulses through PDS in a varied form with the nomenclature ”Scheme for Supply of Imported Pulses at Subsidized rates to States/UTs for Distribution under PDS to BPL card holders" with a subsidy element of Rs. 20/- per Kg to be paid to the designated importing agencies up to a maximum number of BPL card holders for the residual part of the current year and extended the scheme for subsidized imported edible oils w.e.f. 1.10.2012 to 30.9.2013 with subsidy of Rs.15/- per Kg for import of up to 10 Lakh tonnes of edible oils for this period.

2. Budgetary and other measures

A number of measures have been announced in Union Budget 2012-13 to augment supply and improve storage and warehousing facilities. Government had launched a National Mission for Protein supplements in 2011-12 with allocation of Rs 300 crore. To broaden the $cope of production of fish to coastal aquaculture, apart from fresh water aquaculture, the outlay in 2012-13 is being stepped up to Rs 500 crore. Recently, Government has permitted foreign Direct Investment (FDI) in multi-brand retail trading. This will help consumers and farmers as it will improve the selling and purchasing facilities.

3. Monetary measures

The Reserve Bank of India (RBI) had also taken suitable steps to contain inflation with 13 consecutive increases by 375 bps in policy rates from March 2010 to October 2011.