Agencies
New Delhi, Apr 4:
Inflation galloped to 7 per cent for the week ended March 22, on higher prices of food, vegetables, minerals and manufactured items, even as measures to tame prices are expected to take effect only in 2-3 weeks.
Inflation growth in the previous week was 6.68 per cent and was 6.54 per cent in the corresponding week a year-ago.
On Monday, the government decided to abolish import duty on crude form of edible oils, cut rate on refined edible oils and ban non-basmati rice exports among other measures to ease the pressure off prices.
However, Manila-based Asian Development Bank expects these measures to influence prices only by the month end.
The high rate of inflation could also prompt RBI to take monetary measures, like hike in interest rate or tighten money supply through hike in CRR.
During the week, prices of fruits and vegetable, pulses, cereals, eggs, meat and fish went up, while condiments and spices were cheaper. The mineral category-index shot up by 38.2 per cent driven by 46 per cent rise in prices of iron ore.
In the manufactured items category, sunflower oil, vanaspati, butter, mustard oil, sugar and groundnut oil became expensive, while prices of ghee, coconut oil mellowed down by 1 per cent each.
At the same time, prices of steel ingots, alloy steel casting were higher. However, car chassis moved down by one per cent.
On the other hand fears of an imminent slowdown in economic growth following high inflation rate brought the market down today with the BSE Sensex dropping more 480 points, even as the Asian indices ended mixed and European bourses traded better. The 30-share index on the Bombay Stock Exchange closed the day at 15,343.12, a loss of 489.43 points, or 3.09 per cent, from its last close.
The broader 50-share S&P CNX Nifty of the National Stock Exchange also dropped by 124.60 points, or 2.61 per cent, to close at 4,647.00 from its previous close of 4,771.60. Traders said the markets were gripped with fears that following inflation soaring further stringent monetary measures, including a hike in C ash Reserve Ratio (CRR), could be on anvil.
`Govt to act against hoarders'
Singapore: Commerce and Industry Minister Kamal Nath on Friday said the government would not hesitate to act against hoarders and profiteers, even as he admitted supply side management was a challenge to controlling prices of essential commodities. "We will not hesitate to take the strictest measures, including using legal provisions against hoarding and profiteering whether in food, cement or steel," Nath, who is on a visit in Singapore, told reporters on Friday.
On March 31, the union government asked states to initiate steps under provisions of the Essential Commodities Act to check against hoarding.
Soaring inflation douses talk of early polls
India's food bills are soaring and the economy is slowing as high interest rates bite, threatening to derail an election strategy the ruling coalition hopes will return it to power before May next year.
At the end of February, the finance minister drew loud cheers from governing lawmakers as he unveiled a populist budget loaded with eye-catching tax cuts and a massive $15 billion scheme to write off the debts of millions of small farmers.
Analysts saw it as the launch pad for elections and said the government was priming its armoury should it decide to take on fired-up communist allies over a controversial nuclear energy deal with Washington, a fight which could trigger early polls.
But the vote arithmetic now has a new focus as the cost of a bowl of rice and less happy macroeconomic indicators trump anger over atomic co-operation with the United States, which the left fears is trying to erode India's independent foreign policy.
"Nobody is going to talk about the nuclear deal, they are going to be talking about prices," C.P. Chandrasekhar, economics professor at Delhi's Jawaharlal Nehru University, said of the likely mood among members of the ruling coalition.
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