The average inflation rate in 1997-98 was 5 per cent, helped largely by stable prices of food items.
The inflation rate, which stood at a modest 4.9 per cent at the beginning of the current fiscal (1998-99), is now hovering at around 6 per cent. The Economic Survey indicates larger imports of foodgrain, sugar and cotton in the current fiscal.
It adds that efficient supply side management will be important to offset the possible shortfall in the production of these commodities. The survey has indicated that an inflation rate of 4-6 per cent was acceptable in a growing economy like India.
It also promises a conscious effort by the government to control money supply and fiscal deficit in order to keep the inflation rate within the manageable rate of 4-6 per cent.
A significant aspect of price movement during 1997-98 was the contribution of the energy sector _ comprising of coal, mineral oil, petroleum crude and natural gas _ which accounted for 23.9 per cent of the overall rise in 1997-98.
The contribution of food items to inflation slid from 28 per cent in 1996-97 to 14 per cent in 1997-98.
Wheat prices, which had registered a 31 per cent rise in 1996-97, declined by 11 per cent, having a calming effect on inflation in 1997-98.
However, vegetables prices increased by 15.5 per cent, sugar by 5 per cent and edible oils by 6.2 per cent. 1997-98 was characterised by overall price stability. The inflation rate touched a 11-year low of 3.4 per cent in August, 1997.
The low rate of inflation during the year has been attributed to a record rabi harvest, lower rate of increase in prices of primary articles and manufactured goods and controlled money supply growth.
The inflation rate hovered below 4 per cent till November, 1997. A mild upward push in the prices of primary products resulted in 1997-98 averaging an inflation rate of 5 per cent.
The prices of primary articles registered minor rises of .6 and .8 per cent in the first two quarters of 1997-98 before rising to 3.5 per cent in the third quarter.
The overall prices of 30 essential commodities increased by 5.4 per cent in 1997-98. But, prices of manufactured goods remained more or less stable throughout 1997-98, showing an average increase of 3.8 per cent, the it said.
Inflation, based on the consumer price index for industrial workers (CPI-IW), declined sharply from 9.3 per cent in April, 1997 to 4.7 per cent in August, 1997 before rising to a high 9.7 per cent in January, 1998.
The price movement in CPI-IW during April, 1997-February, 1998 reveals an increase of 8.8 per cent compared to a 9.7 per cent increase in the corresponding period in the previous fiscal.
The wholesale price index rose by a modest 1.1 per cent in the first quarter of 1997-98 against a rise of 2.3 per cent in the correspondent period of 1996-97.
The trend continued in the second quarter with an additional rise of 1.4 per cent against 3.5 per cent in the second quarter of 1996-97. The third quarter saw a rise of 2.7 per cent, mainly because of the advent of lean season for wheat and other agri products. The fourth quarter saw virtually no growth in the price index.
