The government, yesterday announced a host of measures to tame inflation, which had soared to a five-month high of 6.01 per cent in May. These decisions were taken at a high-level meeting of Ministers and Secretaries called by Finance Minister Arun Jaitley.
"Some of these measures have been long suggested remedies for curbing food inflation but the erstwhile government was unable to move swiftly on these owing to coalition dynamics," Deutsche Bank said in a research note.
Among other measures, the Centre asked the states to delist fruits and vegetables from the Agricultural Produce Market Committee list, allowing farmers to sell their produce directly in the open market, and imposed a minimum export price of USD 300 per tonne on onions to curb their exports.
The government has also decided to release an additional 50 lakh tonnes of rice to states for sale in the open market at APL (above poverty line) rate of Rs 8.30 per kg and allowed states to directly import pulses and edible oils to meet shortages.
Also Read
The Wholesale Price Index (WPI)-based inflation rose to a five month high of 6.01 per cent in May.
Experts apprehend that the likelihood of poor monsoon coupled with rising oil prices on the back of political tension in Iraq, may further aggravate the domestic scenario.
Rising inflation will make it difficult for RBI to cut interest rates to boost growth. It had hold rates steady for last two policies to check inflation.