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Inflationary pressures to continue, says finance minister

High global commodity prices will continue to put inflationary pressure on the Indian economy, said finance minister Pranab Mukherjee.

business Updated: May 22, 2011 00:54 IST
HT Correspondent

High global commodity prices will continue to put inflationary pressure on the Indian economy, said finance minister Pranab Mukherjee.

"We are told that there could be pressure on commodity prices because of shortage in production of certain essential food items," said Mukherjee on the sidelines of annual general meeting of Indian Banks' Association.

"When there is uncertainty in the global market particularly on those products for which we have to depend through imports. Naturally it would affect," he added.

The wholesale price index, the main gauge of prices, rose 8.66 % annually in April and has been consistently high for months.

"By constantly adjusting the policy, both from the supply side and the demand side and by taking appropriate fiscal policies in tandem with the RBI, we are trying to achieve high growth and acceptable levels of inflation," Mukherjee said.

The RBI expects inflation to stay high in the first half of the fiscal year before easing, and ending the year at around 6%.

The Reserve Bank of India (RBI) raised interest rates in early May for the ninth time since March 2010, by 50 basis points, in order to control inflation.

Finance minister said that rising level of Non Performing Assets (NPAs) is a concern. " NPAs, both gross and net, have increased as against the level in the previous year. It is important for the banks to constantly monitor and bring down the NPA to previous level," he said.