Finance Minister Pranab Mukherjee on Monday, praised West Bengal Chief Minister Mamata Banerjee for intervening in the market to ease supply side constraints in tackling inflation.
"Supply side constraints are a reason for high inflation. I believe state governments ought to play a very positive and constructive role. Some states like West Bengal had done exactly that, the chief minister herself intervened and as a result supply side constraints were removed to a certain extent," Mukherjee said at a Ficci seminar here.
The minister said, "We are taking more lasting and positive steps. In the last two budgets I made special provisions for the second Green Revolution for pulse and edible oil districts and this has started yielding results."
Mukherjee said huge fiscal expansion had created pressure on inflation and to prevent further deceleration of growth the government had to take steps.
"RBI correctly thought that extra liquidity should be sucked out of the system by following a tight monetary policy," he said.
"I am happy that headline inflation has come down from around 9.7 per cent, which was dangerously close to double digits, to 7.47 per cent in the month of December and I believe that it will continue to come down till March," he said.