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Inflation During 2017-18 Averaged To The Lowest In The Last Six Years

Jan 29, 2018: Inflation in the country(India) continued to moderate during 2017-18. Consumer Price Index(CPI) based headline inflation averaged 3.3 per cent during the period which is the lowest in the last six financial years. This has been stated in the Economic Survey 2017-18 placed in Parliament today by the Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley.

The decline in the inflation was broad-based across major commodity groups except Housing and Fuel & Light. The Headline inflation has been below 4 per cent for twelve straight months, from November, 2016 to October, 2017 and CPI food inflation averaged around one per cent during April-December in the current financial year, says the Survey.

Inflation in India

The Survey observes that the economy has witnessed a gradual transition from a period of high and variable inflation to more stable prices in the last four years. Headline inflation measured by the CPI has remained under control for the fourth successive year. In fact the decline in the inflation in the first half of the current fiscal year was indicative of a benign food inflation which ranged between (-) 2.1 to 1.5 per cent. Survey says “This has been possible due to Good agricultural production coupled with regular price monitoring by the Government.”

However, the rise in food inflation in recent months is mainly due to factors driving prices of vegetables and fruits. In rural areas while food was main driver of CPI inflation during 2016-17, in urban areas housing sector has contributed the most to inflation in the current financial year.  If we a look at state-wise inflation during 2017-18, many states have witnessed sharp fall in CPI inflation. Inflation in 17 states was below 4 per cent, during the period.  This has been possible due to various efforts made to contain inflation at various level by the Government, says the Survey.

Measures to Control Inflation

Controlling inflation has been a priority area for the Central Government, says the Economic Survey 2017-18 placed in Parliament today by the Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley . It says that the Government has taken a number of measures for this purpose which, inter alia, include the following:-

• Advisories are being issued, as and when required, to State Governments to take strict action against hoarding & black marketing and effectively enforce the Essential Commodities Act, 1955 & the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980 for commodities in short supply.

• Regular review meeting on price and availability situation is being held at the highest level including at the level of Committee of Secretaries, Inter Ministerial Committee, Price Stabilization Fund Management Committee and other Departmental level review meetings.

• Higher MSP has been announced so as to incentivize production and thereby enhance availability of food items which may help moderate prices.

• A scheme titled Price Stabilization Fund(PSF) is being implemented to control price volatility of agricultural commodities like pulses, onions etc.

• The Government approved enhancement in buffer stock of pulses from 1.5 lakh MT to 20 Lakh MT to enable effective market intervention for moderation of retail prices. Accordingly, a dynamic buffer stock of pulses of upto 20 lakh tones has been built.

• Pulses from the buffer are being provided to States/UTs for PDS distribution, Mid-day Meal scheme etc. The requirement of pulses by Army and Central Para-military Forces.

• The Government has imposed stock holding limits on stockiest/dealers of sugar till April, 2018.

• The Government imposed 20% duty on export of sugar for promoting availability and moderating price rise.

• Permitted import of 5 lakh tones of raw sugar at zero duty; subsequently, import of additional 3 lakh tones was allowed at 25% duty.

• Export of all varieties of onion will be allowed only on letter of credit subject to a minimum export price (MEWP) of $850 per MT till 31st December, 2017.

• States/UTs have been advised to impose stock limit on onions. States were requested to indicate their requirement of onions so that import of requisite quantity may be undertaken to improve availability and help moderate the prices.

Source: Ministry of Finance, PIB Delhi

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