Surging global prices of commodities and crude oil was putting tremendous pressure on the government to rein in the price rise, said Finance Minister P Chidambaram, but committed to making every effort to ensure that rise did not affect the vulnerable.
Chidambaram made it a point to emphasise that challenges facing the government on account of global prices were very different and difficult than those encountered by previous governments. He said the Congress-led coalition was taking all possible measures to check inflation and ensure insulation for the vulnerable.
“We will take fiscal steps... We will urge RBI to take monetary steps. Its (RBI) dharma is price stability,” the minister said.
But as inflation hovers around 5 per cent, Chidambaram also emphasised on the importance of maintaining high growth rates.
“I am confident that it (RBI) will keep in mind the need to stimulate growth and ensure that growth remains high and sustained,” he said in reply to the debate on the Budget in the Rajya Sabha, alluding to cuts in excise and customs duties in the Budget to help push up industrial growth.
Later, the House passed the vote on account as well as the supplementary demands for grants to allow the government to meet its expenses till the Budget is passed by Parliament.
He said the Indian stock markets seemed to be taking cues from the US and, to a larger extent, Asian markets even though the US sub-prime mortgage market crisis had not directly affected Indian institutions except one private sector bank.
“But as the crisis moved from sub-prime mortgage market to housing market, and now housing market to the credit market, there has been some impact upon India,” he said, pointing that his assessment was that the impact would be a second order impact, a moderate one.
The stock market that has been on the decline, however, seemed to taking cues from markets in the US and Asia — Hong Kong, Shanghai and Tokyo — that begin trading a few hours before India.
“If you watch closely, you will find what is happening in Asian markets is impacting the Indian stock market,” he said.