Inflation larger social issue, says FM

More than economic or political concerns, rising inflation is a larger social issue that could be tackled in the long run through increased supply of farm products, which is precisely the focus of Budget 2007, Finance Minister P Chidambaram said today.

"While fiscal steps will have some immediate impact, monetary side will take some time to transmit in the system. Supply side is, indeed, a durable answer to inflation. More wheat, more rice, more sugar, more pulses, more oilseeds is durable side," he said at a post-budget interaction with Assocham today.

"Inflation must be and will be moderated," he said in response to an observation from the floor that consumer price-based inflation (for agriculture labour) was much higher at around 12% than 6.05% based on the wholesale price index.

Like augmenting supply of inputs is the durable answer to industry's growth, raising supply is the durable answer to agriculture, he said, defending the Budget's focus on the farm sector. "The laws of economics cannot be different for agriculture," he said.