Faced with the dichotomy of overflowing granaries and rising commodity prices, Prime Minister Manmohan Singh on Tuesday said the government will do 'everything possible' to put the lid on food inflation.
He conveyed this to a FICCI-led delegation that called on him.
"He (the prime minister) was quite confident that given the buffer stock, they (government) would be able to handle the food inflation," FICCI secretary general Amit Mitra told reporters after the meeting.
Central agencies like Food Corporation of India have buffer stocks of over 50 million tonnes of rice and wheat.
The delegation, which met the prime minister against the backdrop of drought in several parts of the country, was informed that the government godowns were brimming with food grain stocks and that it would do 'everything possible' to ensure that there is no food inflation.
While the Wholesale Price Index based inflation remains negative, prices of essential commodities like pulses, sugar and vegetables have skyrocketed in the past few months.
The prime minister informed the business leaders that the government was gearing up the public distribution system (PDS) to mitigate the impact of deficient rains.
As many as 141 districts have been declared drought-hit.
On concerns of drought on the economic growth, FICCI president Harsh Pati Singhania said, "There will always be concerns."
Singhania also said that investments in agri-market infrastructure should be included in the priority lending of the banks.
Ensuring adequate liquidity to ensure industrial growth was also a key issue, the FICCI president said. He said the prime minister has assured them that the government borrowing programme would be managed efficiently.
Against the backdrop of a series of stimulus packages and pressure on the tax revenue, the Centre has announced plans to depend on commercial borrowings of Rs 451,000 crore (Rs 4,510 billion) in the current fiscal, a rise of over 25 per cent in 2008-09.
The programme has led to concerns among economists and industry that it would crowd out corporate borrowers, leaving less banking resources for the private sector.
Image: A billboard installed by Bharatiya Janata Party (BJP) against inflation during the United Progressive Alliance government rule.
Photograph: Raj Patidar/Reuters
