Govt deeply concerned about rising prices: Pranab Mukherjee

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Finance Minister Pranab Mukherjee told Parliament that the government is deeply concerned about rising prices. A hike in the support prices of grains led to inflation, he added. Food price index was up 15.58% in the 12 months to November 14.

He reiterated that the Centre will take all fiscal and monetary measures to contain prices. "We will take steps if inflation breaches the tolerable limit. Steps will be taken to correct the demand-supply mismatch."

Mukherjee expects good procurement of foodgrains from Uttar Pradesh.

What's the status on crops?
Agriculture Minister Sharad Pawar says the country imported 1.59 mt pulses in April-October, reports NewsWire18.

He says cane planting is down in key states on poor rains. "A sizable portion of the cane crop has been diverted to the manufacture of jaggery in Uttar Pradesh."

According to him, paddy procurement in Haryana, Punjab is up year-on-year. "The late rains will help the rice crop in Utttar Pradesh."

He says the government may extend the ban on sugar futures trade beyond December 31.

Here is a verbatim transcript of Abhijit Neogy's comments on CNBC-TV18. Also see the accompanying video.

It was a debate in the Lok Sabha on the price rise issue. The sense that we get from the FM's speech is essentially that it is a demand/supply mismatch, which has caused the food price inflation which is in double digits. Essentially what he is indicating is there are two things that the government will have to do, one is to ensure optimal procurement and for that he has indicated that he wouldn't mind paying high minimum support prices (MSPs), that is an important political point and that is an important economic point because the issue of MSP has been hotly debated across crops be it sugarcane, paddy or even wheat. Also what he is indicating perhaps is that if demand/supply mismatches have to be addressed perhaps India has to go for imports as and when necessary. The Indian government as a policy does not disclose the quantum of imports because this is price sensitive in the international markets. It immediately senses price is souring in the international markets but make no mistake, he is clearly hinting at the possibility of more imports if and when that is required.

Sharad Pawar on the other hand chose to pass the buck on to the states saying that states should rectify the PDS, undertake anti-hoarding activities just to ensure that prices come down. So the government is fully aware of the political ramifications of the price rise issue and the stopping short of actually taking fiscal and monetary measures, perhaps the government will do all it can in its powers to ensure atleast the supply side imbalances are eased out in the near-term.