Hyderabad, Nov 23 (ANI): Expressing concern over rising inflation, Reserve Bank of India (RBI) Governor D. Subbarao has said efforts need to be taken to curb it, especially for the benefit of the poorer sections of society.
"Inflation is a regressive tax everywhere but is a particularly regressive tax in a poor country like India because it hurts poor the most, so we need to be much more sensitive to combat inflation. I see all this debate in the papers about global inflation and the ...... being insensitive to the growth concerns, of course we are sensitive but we are equally sensitive to the inflation concern," Subbarao told the media here.
He also said that the government's food for work programme and proposed food subsidy bill will further raise fiscal deficit and inflationary pressures.
"The Bill (Food Security Bill) would cover 68 percent of the 1.2 billion population in the country, that obviously raise the procurement demand relative to the supply, supply will now increase as rapidly as per demand, so that is going to be pressure point. On top of that procuring so much of food will have fiscal implications and the higher fiscal deficit itself if there is no corresponding reduction elsewhere will have pressure on inflation because higher fiscal deficits raise demand and contribute to inflation," he added.
He also said that steps might be warranted to curb inflation expectations in face of sustained high food inflation, flagging the need to revisit politically sensitive subsidy schemes in agriculture.
Subbarao also said that large increase in the minimum support prices on food grains by the government to farmers was one of the reasons driving food inflation.
Food inflation has been stubbornly high over the last few years in India, inspite of record food grain production and robust buffer stocks.
The RBI has already raised key interest rates 13 times since early March 2010 to clamp down on stubborn inflation, largely driven by high food prices.
Data released last week showed India's food price index rose 10.63 percent and the fuel price index climbed 15.49 percent in the year to November 5. (ANI)