India expresses concern over increase in international crude oil prices

Tuesday, March 1, 2011

NEW DELHI - Grappling with a high rate of price rice, Union Finance Minister Pranab Mukherjee today expressed concern that increasing prices of crude oil and other commodities in global markets could add to inflationary pressure in the country.

Addressing the 83rd Annual General Meeting of FICCI here, Mukherjee said: “The creeping increase in international crude oil and other commodity prices is a reality that we are already confronting. The possibility of the global commodity inflation adding to domestic inflationary pressures cannot be ruled out.”

“This rapid recovery of the growth momentum is comforting, but we cannot be complacent as there are several challenges that the Indian economy faces from its current external and domestic context. There is also the danger of sovereign debt crisis in peripheral Euro-zone countries spilling over to financial markets,” he added.

Mukherjee said there is a need to improve the supply response of agriculture to expanding domestic demand and significantly enhance investment in the sector by the private and public sector.

“Determined measures on both these issues will help address the structural concerns on inflation management. It will also ensure a more stable macroeconomic environment for continued high growth in the medium-term,” he added.

He further said that as government spending comes down as a part of the fiscal consolidation process, India needed to effect adjustments in the composition of growth on the demand and supply side.

“We have to ensure that the revival in private investment is sustained and goes back close to pre-crisis growth rates,” he said.

This required a stronger fiscal consolidation to enlarge the resource space for private enterprises,” he added.

He also said that there is a need to speed up development of infrastructure and remove bottlenecks.

“We need to supplement budgetary resources by attracting more and more private investment, both domestic and foreign, into infrastructure development. Financing infrastructure would be a big challenge in the coming years and to meet the challenge some innovative ideas and new models of financing would be required,” he added. (ANI)

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