Subbarao to discuss price rise with govt panel

Reserve Bank of India Governor D Subbarao will brainstorm over the issue of rise in prices at a meeting of the Inter-Ministerial Group on inflation later this week.

The IMG, chaired by Chief Economic Advisor Kaushik Basu, is scheduled to meet on May 6 to discuss the issue of 'overall macroeconomic demand management' and the RBI Governor has been invited to be the key speaker for the meeting, said a finance ministry official.

The finance ministry is also collating the data on entire food supply chain to identify the bottlenecks in the process.

It has asked for information on food prices right from farm-gate level to retail level to identify the factors causing the price rise and plug the loopholes.

"We are collating data from across the supply chain, including mandis, and analysing it. The issue, however, is that we have to rely on secondary data. This will be an important item on the agenda of next IMG meet," said a finance ministry official, requesting anonymity.

Overall inflation in March stood at 8.98 per cent, which was higher than the estimate of the central bank. RBI has increased its key policy rates nine times since March last year to check rising prices.

Basu is expecting inflation to ease to 8.3 per cent for April. Recently, he noted that inflation was driven by a surge in global commodity prices and easy flow of funds from the advanced economies and that the government would have to come out with new measures to control this 'new kind of inflation'.

The government had constituted IMG in February to suggest measures to arrest the rise in prices, particularly of food items.

It has been entrusted with the task of studying and proposing policies pertaining to food article inflation and macro-economic demand management.

Planning Commission Member Secretary Sudha Pillai, Department of Agriculture & Cooperation Secretary PK Basu, Department of Food & Public Distribution Secretary BC Gupta and Department of Animal Husbandry & Dairying Secretary Rudra Gangadharan are members of the group.

In the last IMG meeting on March 21, there was a discussion on the need to revise the Agricultural Produce Market Committees Act and encourage competition among traders and also to promote efficiency in retailing.

Future Group Chairman Kishore Biyani, who was a special invitee, had made a presentation on 'debottlenecking the food value chain'.

Image: D Subbarao