The Centre is watching the output of pulses and oilseeds in the rabi season that comes up for harvesting during the second half of April to assess the direction of prices of food products before embarking on further steps to control inflation.
"We have to get a fix on what the pulses production is. And if supply side (production) of pulses and edible oils improves, it together with monetary and fiscal policy initiatives will moderate inflation,” said Union Finance Minister P Chidambaram in Mumbai on Wednesday.
The annual inflation rate is still above 6 per cent, mainly on account of rising food prices. Unlike manufacturing products, whose prices can be controlled by fiscal measures, food prices are supply driven.
Chidambaram was responding to queries after inaugurating the annual conference of the International Organisation of Securities Commissions (Iosco), being held in India for the first time under the auspices of the Securities and Exchange Board of India.
Defending the Reserve Bank of India move to curtail runaway credit growth, Chidambaram said, "The RBI is right in taking steps to moderate credit growth. It is in the larger interest of the economy. The RBI has identified unusual credit growth to some sectors."
"Inflation expectations loom large in most parts of the world. To the extent that some of the challenges originate from abroad, we have little control over them," the minister added.
However, he said the measures were tuned in such a way that it would not hurt economic growth. He also sought to allay fears of a rise in loan defaults in the wake of rising interest rates. Interest rates on some flexible rate loans have seen a rise of 50 per cent over the last 12 months.
Earlier inaugurating the conference, the minister cautioned investors that they had to live with some degree of volatility in the equity, forex and debt markets irrespective of the degree of capital account convertibility.
Referring to the challenges faced in Indian capital market regulation, Sebi Chairman M Damodaran said: "There are nearly 10,000 registered brokers, in addition there are close to 28,000 sub-brokers. The regulatory responsibility of these entities rests significantly with Sebi at present with the absence of an industry-level self-regulatory organisation."
Iosco is a Spain-based international forum of securities market regulators from 180 countries.