FM, RBI hint at more steps to rein in prices

Finance Minister P Chidambaram today indicated that both the government and the Reserve Bank of India (RBI) would not hesitate to take more steps to contain inflation, which is hovering at 6 per cent plus.

"They (the RBI Board members) said that we must pay special attention to edible oils, milk and fertilisers. The point is well taken," Chidambaram said after a post-Budget meeting with the central board of the RBI here. "The government fully supports the monetary measures taken by the RBI and will continue to stand by and support the RBI," he said.

Chidambaram conveyed to the RBI Board members, including Governor YV Reddy, that "the goal is to moderate inflation without affecting growth".

Finance Minister P Chidambaram said India had managed to absorb the oil price shocks without any instability in the last three years. After the oil shocks had eased, supply side constraints on food arose and even that had been managed with moderate inflation.

The RBI Board members appreciated the government's emphasis on irrigation, education and supply side issues in the Budget 2007-08.