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Poor monsoon may hike prices further: RBI

IANS
Aug 18, 2009 at 10:24pm IST

New Delhi: The erratic monsoon may lead to a further rise in prices of essential commodities, the Reserve Bank of India (RBI) said on Tuesday.

"The erratic monsoon may put pressure on inflation and could increase the prices," RBI Deputy Governor KC Chakrabarty told reporters on the sidelines of a conference in the Capital.

ALSO SEE Drought is here but no need panic, says PM

He said there was no proposal for rescheduling farm loans right now and it could be taken up next year.

DRY SPELL: The Government has so far declared 177 of India's 626 districts drought-hit.

Earlier in the day, Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the country has enough food stocks to counter inflationary pressures.

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According to the Agriculture Ministry, rainfall has been 29 per cent below normal between June 1 and August 12. The Government has so far declared 177 of India's 626 districts drought-hit.

According to official data, the prices of pulses were up by 18 per cent this week, while those of cereals went up by 12 per cent. The prices of vegetables and fruits rose 18 per cent.

ALSO SEE India has enough foodgrain till next year: Govt

Earlier, RBI Governor D Subbarao too had expressed concern over spiralling food prices, but said it was not the right time for the bank to intervene.

"Yes, the agricultural situation is disturbing and there will be pressure on food prices. We are sensitive and mindful of the drought's impact on inflation and will take appropriate steps," he said on the sidelines of a RBI function in Hyderabad on August 14.

Last week, Prime Minister Manmohan Singh said the Government would do "everything possible" to put the lid on food prices inflation. The Government has already asked the states to act against hoarders to check rising prices.

While speaking at the Chief Ministers' conference on Monday, he reiterated that there was no need to panic over the drought situation.

The Prime Minister said the Government has "a better understanding of how to handle a crisis like this".

The Government has already constituted an Empowered Group of Ministers (EGoM) to look into the drought issue.

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