Govt hints at more fiscal measures

Inflation based on consumer price index still low at 3%, says FM.

A day after reducing Customs and excise duties on petroleum products, the government today said it would take additional fiscal measures to check inflation if required.

"We will watch the situation and more fiscal measures to control inflation will be taken, if necessary," Finance Minister P Chidambaram told reporters after a meeting of the Cabinet Committee on Prices.

He said there were ample stocks of foodgrain, pulses, fruits and vegetables. "The government will ensure that there is adequate supply of essential commodities," he added.

There have been demands to reduce duties on steel, edible oil, sugar and consumer goods to check inflation, which touched 7.6 per cent during the week ended July 31.

The duty cuts on petrol, diesel, kerosene and liquid petroleum gas (LPG) would dampen inflationary expectations, Chidambaram said, adding that inflation based on wholesale prices would come down in some time.

The minister said inflation based on the Consumer Price Index, the benchmark globally, was still very low at around 3 per cent and there was no cause for undue worry.

Yesterday, Chidambaram reduced Customs duty on petroleum products by 5 per cent and cut excise on petrol and diesel by 3 per cent each and on kerosene by 4 per cent.

Apart from fiscal measures, the government is also watching the development in the monetary sector and may take steps ahead of the busy-season credit policy.