The Reserve Bank of India will try to strike a balance between the need for growth and the necessity to contain inflation at its monetary policy review next week, finance minister Pranab Mukherjee said on Sunday.
He refused to speculate on the steps the Central Bank would take at its Nov 2 monetary review.
"We have to wait till monetary review by RBI," he told reporters after laying the foundation stone of a campus of the Management Development Institute in Jangipura, some 260 km from Kolkata.
He said although food inflation was coming down, the government would wait for some more time before taking any policy measure.
"Inflation is a matter of concern. For 11 months from April 2009 inflation has been around double digits, but now we can see a silver lining and in the last month all the indices including WPI (Wholesale Price Index) and the three consumer indices were in single digit after 16 months," he said.
The finance minister said the government needed to be given time to control inflation.
"We need time and you have to allow some time to pass. During the rainy season, the prices of the essential commodities went up and continued (in that range) for a long time. There were a shortage of pulses and edible oil. So we have kept the import door open and supply has been received. Now government has to maintain both the sides of demand and supply," said Mukherjee.
Overall inflation was 8.6% in September. However, for the week ended October 16, food inflation stood at a high 13.75%, even though this was down 1.78% points vis-a-vis the previous week on the back of improved food supplies.
Mukherjee emphasised the need for revamping the public distribution system (PDS) to manage food inflation.
"There is need for revamping the public distribution system. Sometimes when inflation cannot be controlled we can manage it by providing food at a highly subsidised rate."
He said the government had taken up a scheme under which 6.5 crore below the poverty line (BPL) families are entitled to get wheat and rice at Rs 6 and Rs 8 respectively. Out of this, 2.5 crore families under the Antodaya Annapurna Yojana will have wheat for Rs 2 per kg and rice for Rs 3 a kg.
"Each family is entitled to get 35 kg per month. But the scheme will not be effective unless the public distribution system is revamped," he said.
He blamed the West Bengal government for not revamping the PDS in the state.
"We have been requesting the state government to revamp the PDS system. But the state government is not cooperating with us in revamping it," said Mukherjee.