NEW DELHI (Commodity Online) : India’s Finance minister Pranab Mukherjee said high inflation in the country is due to shortage of supply in food items and high procurement prices of cereals.
Speaking to newsmen here he said, "If, you look at the current trend in the inflationary pressure, it is not because of substantial monetary expansion but because of supply bottlenecks in respect of certain essential commodities particularly the food items,".
He added that the contribution of the other items to inflation is not as high as food items.
"It (food inflation) reached as high as 19.9 per cent. Gradually, it is coming down. Substantially, it (high food inflation) is because of the short supply in edible oil, pulses and sugar," Mukherjee said.
He said supply of cereal is adequate, but their prices increased because remunerative procurement prices led to rise in retail prices as well.
The Finance Minister said the RBI has assured him that like last fiscal, the government's borrowing programme in the next fiscal will also be undertaken in a way that the resources for private sector does not dry up.
He said the goal of fiscal consolidation and high growth are not contradictory approaches and he would like to see high nine per cent growth as soon as possible.
Mukherjee also said that whenever there is a proposal for banking consolidation, it should be considered in consultation with the RBI.
