Worst of inflation now over, says Chidambaram

Declaring that the "worst is over" on inflation with global crude oil prices beginning to moderate, Finance Minister P Chidambaram today promised in the Lok Sabha to keep a close watch on the prices of essential commodities but ruled out any further duty cuts before the Budget.

Responding to a debate on prices, the finance minister said the government had suffered revenue losses of Rs 4,400 crore on account of cuts in import and local excise duties. While some tax adjustments could be made, the government was unlikely to lower duties further immediately, he said.

"I don't see any scope for further reduction in duties before the Budget.We have done as much we could have done," Chidambaram said.

He added that unless there were unexpected external shocks, the wholesale price index-based (WPI) inflation would moderate, along with the CPI (consumer price index).

Chidambaram pointed out that inflation had slowed to 7.3 per cent for "the period ended two weeks earlier", for which official data would be released on Friday.

The inflation rate has been over 7 per cent since August, while the CPI-based inflation stood at 4.57 per cent in October, dipping marginally from 4.81 percent in September.

The minister said he would control the rise in wholesale prices over the "medium term" through strict liquidity management. "We are targeting to keep money supply in the system at around 14 per cent," he said.

Dissatisfied with Chidambaram's reply, the entire Opposition, led by Trinamool Congress leader Mamata Banerjee, walked out saying the minister was trying to justify the increase in prices.