Finance Minister Jaswant Singh today said the Centre was keeping a watch on the increasing inflation rate, but there was no cause for alarm at present.
The point-to-point inflation rate touched 6.16 per cent for the week ended April 19, 2003.
At a meeting of the consultative committee of the finance ministry, Singh said the major factors contributing to the rising inflation were the rise in oil prices due to the Iraq war, the impact of drought on the prices of edible oils and better price realisation in the manufacturing sector.
The minister said the macro-economic situation in 2002-03 had remained comfortable despite the drought, the uncertainties on the external front and a delayed global recovery.
The finance minister said the impact of the Iraq war on the domestic economy was minimal and already in the reverse gear.
He said global oil prices, which were above $30 per barrel during the war, was quoted in the six-month futures at $22 per barrel.
The minister hoped that the effect of the war on the economy would be neutralised by a normal monsoon this year, as projected by the meteorological department.
Responding to the suggestions by some members, Singh said the economy needed to move in pace with global developments and, therefore, help Indian companies in tapping investment opportunities in post-war Iraq.
He said India had strong bonds with Iraq and could play a significant role in the restructuring of the war-ravaged country.
All the members present in the meeting were of the opinion that India should exploit opportunities available in the restructuring of Iraq.
The meeting was attended by V Saroja, Trilochan Kanungo, Mohan Rawale, Kirit Somaiya, Rajeev Shukla, Lal Jan Basha, Vijay Mallya and Mahendra Prasad among others.
