Import doors open to improve supply position: Mukherjee

KOLKATA/DHAKA - India’s central bank, the Reserve Bank of India (RBI) is closely monitoring inflationary trends, Finance Minister Pranab Mukherjee said in Kolkata on Sunday after completing a day-long visit to Bangladesh.

The median forecast for wholesale price index-based inflation in the first quarter of 2010/11 is at 10.4 percent, according to Reserve Bank of India’s survey, higher than 9.5 percent in the previous survey.

Both consumer and wholesale price indices are in double-digits, making Indian inflation the highest among large economies.

Mukherjee said the government was girding up for imports as and when steps were called for to curb the inflation.

“Reserve Bank is constantly keeping watch on the monetary expansions to improve the supply positions, import doors are kept open and as and when some steps are called for we will be in position to take it,” Mukherjee said.

Mukherjee said provincial governments play a crucial role in assuring subsidised food grains to the public, which would help them to face the inflationary trends.

“States are also to play their roles particular in the area of improving the Public Distribution System through which we can provide the subsidised goods to the vulnerable sections of the society that does not have effect of reduction of rate of inflation but it provides a relief to the more vulnerable section of the society because they get subsidised essential items through the public distribution system,” Mukherjee said.

“Therefore, the revamping of the PD system and making it effective is important where the state government is to play an important role,” he added.

Double-digit inflation, caused mainly by rising food prices has led to massive street protests for almost a year, forcing the main allies of ruling Congress party to call for expanding food welfare schemes.

Mukherjee added that his weekend visit to Bangladesh was a follow-up on Prime Minister Manmohan Singh’s January visit.

“I had very wide ranging discussions with foreign minister, Finance Minister and subsequently on with Prime Minister. The basic thing which we discussed are not any new initiatives or any new programmes but the programmes which were identified during the visit of Prime Minister of Bangladesh to Delhi in last January and which got reflected in the joint communiqui, how the progress on these programmes and projects have going on, it was some sort of review like that and we expressed our satisfaction about the progress but at the same time we do feel there may be some areas of shortcomings or deficiencies at the implementation level. We should have to remove those deficiencies,” he said.

India and Bangladesh signed a one billion US dollar credit line agreement on Saturday in Dhaka, which will be used for development of infrastructure in Bangladesh.

The billion dollar credit deal, offered during a visit by Prime Minister Sheikh Hasina six months ago, carried 1.75 percent annual interest and would be repayable in 20 years including a five-year grace period. By Ravi Shankar (ANI)