Chidambaram assures to control inflation

Finance Minister P Chidambaram today gave assurances that the Reserve Bank of India?s monetary policy and fiscal measures would help to control inflation.

New Delhi: Finance Minister P Chidambaram today gave assurances that the Reserve Bank of India?s monetary policy and fiscal measures would help to control inflation.

“The 25 basis points hike in the Cash Reserve Ratio by the RBI, the steps taken in the last three weeks on the food front and the measures announced today together would have an impact on the price situation,” Chidambaram told members of the Lok Sabha after the passage of the Finance Bill.

“Changes in duty charges that was announced today, would have a revenue implication of Rs 1,500 crore, while those announced between the budget and now would have an impact of Rs 4,840 crore,” he added.

“The food situation has improved in the last two-three weeks. Let us see how these measures come together and impact inflation. We are ready with a set of administrative measures. We will discuss these measures in the next few days," he said. Chidambaram also said that the improvement in tax-Gross Domestic Product ratio has given enough money to the Central Government to vastly increase outlays.

The UPA Government had inherited a tax-to-GDP ratio of 9.2 percent that has risen to 12.5 percent in 2007-08. The ratio will be 13 percent in 2008-09, he said while replying during a debate on the Finance Bill. The improvement in tax-GDP ratio could be seen despite a cut in customs, excise, current budget and personal tax rates, he said.

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