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Inflation to moderate further on govt measures: Finance Secretary

16 Jun 2014 Evaluate

Exuding confidence in the recent moderation of inflation, Finance Secretary Arvind Mayaram, in an encouraging development, underscored the price situation would ease further with recent measures taken by the government as well as growth impulses. He highlighted that falling trend of inflation is positive for the economy and will continue to go south. Retail inflation touched a three-month low of 8.28 per cent in May from 8.59 per cent in April due to subdued prices of vegetables, cereals and dairy products.

However, while, acknowledging that much of price rise in past two to three years was on the back of food items, Arvind Mayaram emphasized upon the need for developing the commodity futures market with an aim to provide price stability and enable the government to deal with inflation more effectively. 

He added that ‘the need of hour’ was to develop market in such a manner that it could provide some price stability over a longer period of time and enable the government deal with inflation more effectively and efficiently. Emphasizing on the requirement to develop depth in commodities market for better price discovery and checking price manipulation, Mayaram said the government is determined to address all issues, including commodity transaction tax, strengthening sector regulator FMC, among others.

Additionally, while reiterating government’s intention for establishing a 'National Common Market' to ensure free movement of goods within the country, he pointed that setting up of integrated market would give commodities market a strong base. Besides, he also endorsed the need for boosting the food processing industry despite the country being the world's largest producer of vegetables and fruits and the need for developing long-term export market in the agriculture sector.

Lastly, on concerns over falling volumes in commodity exchanges due to commodity transaction tax, Mayaram said the market participants should focus more on addressing other weaknesses of the market than just on the tax issue.

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