Amid rising prices burning hole in consumer pockets, former RBI Governor Bimal Jalan today said credible action should be taken to tame inflation and suggested reducing import duties on food items.
"In India, inflationary expectation has to be curtailed. Actions taken to control inflation should be credible," Jalan said at the sidelines of Randstad Awards function here.
He said the effectiveness of monetary and fiscal tools depends on "your ability to convince people that inflationary expectation have subdued".
As per the report of research firm Crisil, Indian households incurred an additional expenditure of whopping Rs 5.8 lakh crore in last three years due to spiralling inflation and dearer food items.
Suggesting ways to control inflation, which has crossed the 9% mark, Jalan said, one way could be to reduce customs on import of food and other items.
"Reduce import duty on food and other articles," the noted economist said.
Earlier in the day, Prime Minister Manmohan Singh said that inflation would moderate to 6.5% by March 2012, if the international oil prices soften and commodity prices do not rise further.
The current inflation is much above the Reserve Bank's comfort level of 5-6%. With the recent hike in prices of petroleum products, the rate of price rise could enter the double-digit zone.
Pointing out that the government did not have a magic wand to bring down prices of international commodities, Singh said, "Inflation is a global problem. China's rate of inflation has gone up sharply."
Jalan said that in India, measures are taken in "bits and pieces" to curb inflationary expectations.
While the government has announced several steps, including restricting export of several essential items, the RBI has tightened its monetary policy 10 times since March 2010.
The RBI is scheduled to come out with its quarterly monetary policy review on July 26.
