Curb inflation, UF plea to Chidambaram; price hike still possible

Tara Shankar Sahay in New Delhi

All constituents of the United Front government, particularly the Left parties, have made an impassioned plea to Finance Minister P Chidambaram to prevent a further rise in the prices of essential commodities, even as the finance minister apprised them of the economic situation of the country.

Briefing mediapersons on Friday in New Delhi about the UF steering committee meeting, which concluded late on Thursday evening, Janata Dal leader Ram Vilas Paswan pointed out that all the constituents, especially the Communist Party of India and the Communist Party of India-Marxist, had made a strong case for holding the prices of petrol, wheat and sugar. However, Chidambaram had graphically painted the economic scenario in the country and said it was up to the government to take a decision in this context.

Asked whether the prices of petrol and several essential commodities would rise following the suggestions of the UF constituents, Paswan said, "The government does not belong to any one party. It is the government of India which decides." Asked to substantiate, the railway minister said, "All suggestions have been heard and they will certainly be kept in mind when the Cabinet Committee on Economic Affairs meets."

Paswan's statement gave the impression that the UF government might, after all, still hike the prices of essential commodities, including petrol and petroleum products, in the impending budget.

This impression was strengthened by the statements of Chidambaram at the UF steering committee meeting. The finance minster had pointed out that even if the price rise in question was prevented through "deficit financing," inflation would still take place.

The CCEA will now consider the UF leaders' suggestions to prevent further price rise when it meets, said Paswan.

Referring to petrol and petroleum products, Paswan pointed out that by March this year, the oil pool deficit would rise up to Rs 170 billion. This was because the government had paid an additional $2 billion for importing crude oil.

He said that when the UF government had assumed power in June last, the price of crude in the international market had risen from about $13 per barrel to $24 per barrel. Despite the rising cost, India's foreign exchange reserve still stood at $19.4 billion, he pointed out.

Regarding sugar, Paswan said that the government had to bear the cost of an additional Rs 12.88 billion due to the sugar subsidy which had commenced in 1992.

He conceded that the public distribution system in some states had to be effectively revamped and that its absence there had enabled unscrupulous elements to grab unwarranted advantages.

Regarding wheat, Paswan explained that when the UF government took power, there was just one and a half million tonnes of wheat, leaving a shortfall of about four million tonnes. This was one reasons why the price of wheat had risen. The second reason was because of hoarders.

Jyoti Basu had advocated strong action against the hoarders, said Paswan. Others who supported Basu were his party colleagues Sitaram Yechury and CPI leaders, including A B Bardhan.

On the question of foreign investment, the Leftist leaders felt that while they were not against it, the goodwill of the NRIs should be tapped. This was stated by the CPI-M leader Harkishan Singh Surjeet.