As food inflation surged to 18.32 per cent, a top adviser in the finance ministry today agreed with Home Minister P Chidambaram that the government does not have all the tools to control food prices.
“Absolutely,” Chief Economic Adviser Kaushik Basu told reporters, when asked whether the government does not have all the tools to control food prices.
Basu said, “This is a huge country in terms of population and land area. It is an utter mistake to think that it is fully within the control of the government to move prices of food up and down.”
Adding: “Government is just an enabling body. There are little local bodies taking decisions, there are private players taking decisions, farmers taking decisions.... Government can give signals, can intervene strategically to keep the situation as much under control as possible.”
While stating that food inflation at 18.32 per cent was not comfortable, Basu said the situation was being watched and appropriate action would be taken. He said a spurt in food inflation was expected, but not to the extent of 18.32 per cent, recorded for the week ended December 25.
He said movement of onions, whose price rise resulted in a surge in inflation, should be facilitated to bring down rates. He said he’d emphasise this at a meeting called by Cabinet Secretary K M Chandrasekhar.
Basu, however, cautioned against using any blunt instrument like arbitrary fixing of prices, as such a move results in a shortage of commodities and retards growth.
