Finance Minister Pranab Mukherjee today expressed concern over the impact of high food inflation on the common man, but exuded confidence that the government would "beat" the surging prices in the next few months.
Addressing the CII annual meet here, Mukherjee also said since some states don't have effective delivery mechanism, the proper impact of the Centrally-initiated measures to contain inflation did not have the desired impacts in those states.
Therefore, the finance minister said, there is an urgent need to revamp the public distribution system, possibly with the help of smart cards, to ensure that the poor are not affected by the rising food prices.
"I am concerned about the prevailing high inflation in the economy. Inflation erodes real income. It hurts the marginalised, the poor segment of our society the most," he said, adding, however, "I am hopeful that the way the government meticulously planned economic recovery... Likewise we would beat the high inflation in the coming few months."
He said wholesale price food inflation dropped from 18.63 per cent on January 1 to about 16 per cent on April 24. But the average inflation based on the consumer price index of items consumed by industrial workers has been about 14.6 per cent for February and March, he admitted.
"But inflation seems to be on the decline now. The CPI- based inflation is higher mainly because food items have significant weight of the index basket and I expect the inflation based on CPI-IW to decline rapidly as the prices of food items is now declining," Mukherjee said.
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A good monsoon, predicted by the Met Department in its first monsoon forecast, is vital for the economy and it would bring down the prices of essential items, Mukherjee said.
Plan head Montek Ahluwalia also said manufacturing and food inflation will be at an acceptable level by August- September. Overall WPI inflation stood at 9.9 per cent in March -- well above the comfort zone of RBI and the government -- and the data for April would be released tomorrow.
In the meanwhile, the International Monetary Fund (IMF), said there is no certainty that consumer price inflation will in fact ease.
"While a part of the increase (in consumer price inflation in a few regional economies, particularly India) owed to food and energy prices, core prices in these economies also rose, revealing the upside risks from the second-round effects of the more volatile components of their consumer price index basket," IMF director for the Asia-Pacific department Anoop Singh said at a separate function today.
Mukherjee noted that some states do not seem to have effective governance and implementation machinery, which has been visible in the recent past.
He said a debate is on about improving PDS and stopping wastage by introducing smart cards and use data base to be generated by the Unique Identification Authority.
"I am sure in due course, the government would adopt a system that not only strengthens the PDS but also reduces expenditure," he said.