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Govt plan to counter inflation flak

business Updated: Jul 30, 2008 00:23 IST
Chetan Chauhan
Chetan Chauhan
Hindustan Times

Facing adverse publicity over rising prices, the government has come up with a data that shows prices of 30 essential commodities has risen only by 5.74 per cent, less than half of the inflation rate.

Armed with figures, the cabinet secretariat has asked all ministries to run awareness campaign to project the “real” inflation picture.

The Cabinet Secretariat has generated the data by using the Consumer Price Index, which shows the prices of items like wheat, rice, edible oil and vanaspati, vegetables and spices, dairy and animal products and tea, sugar and salt has risen only by 5.74 per cent.

“Inflation based on the Consumer Price Index (CPI) for industrial workers, which is the most widely used measure for wage indexation, for the month of May 2008 was lower at 7.8 per cent. During this period, CPI for agriculture and rural labourers increased by 9.1 per cent and 8.8 per cent,” claimed the note circulated by Cabinet Secretariat.

Besides, increase in prices of 30 essential commodities was also 5.74 per cent as on July 5, 2008, which is less than half the rate of inflation measures in terms of Wholesale Price Index (WPI), the note added.

In the note, the government has tried to maintain that WPI, on which inflation is not measured, does not reflect the increase in prices of consumer items. It said the prices for vegetables such as onion and brinjal and fruits as pineapples and papaya had declined in July.

Even though the government admits of higher inflation rate in the last four years, it claims credit for not allowing the impact of international price rise to Indian consumers.

The Cabinet Secretariat also said that the internationally rice prices has increased by 169.9 per cent whereas in domestic market the increase has been only of 8.4 per cent. Similarly, wheat prices have increased by 68.5 per cent internationally whereas in India it has increased by 8.4 per cent.