New govt must frame policies to arrest inflation: India Inc

Written by PTI | New Delhi | Updated: Apr 16 2014, 03:23am hrs
With inflation on the rise, India Inc has called for the next government to take measures, including strengthening of the distribution framework and clearing of supply bottlenecks, to tame price increases.

"We urge the new government to frame policies that allow free movement of agriculture commodities, promote investment in manufacturing, permit FDI in retail, use MNREGA for creation of capital assets and improve the retail distribution network," Assocham Secretary General D S Rawat said.

Retail inflation in March inched up to 8.31 per cent from 8.03 in February, mainly on account of a rise in fruit and vegetable prices.

A new government is expected to take over after May 16, when counting of votes cast in the current Lok Sabha election is scheduled. Polling started on April 7 and is taking place in nine phases, ending on May 12.

"Election-related spending could be a key driver of rise in both wholesale and retail inflation," Rawat said.

Wholesale inflation rose to a three-month high of 5.7 per cent last month, mainly due to a spurt in prices of food items such as potato, onion and fruits.

"Knowing how deep the impact of inflation goes in slowing down the economy, we would urge that policy actions on this front are swift and decisive," CII Director General Chandrajit Banerjee said.

Inflation in the food basket, including beverages, increased to 9.1 per cent in March from 8.57 per cent in the previous month, according to Consumer Price Index (CPI) data released by the Central Statistic Office today.

"We expect a calibrated policy stance in the coming times from RBI in terms of repo rate cut to revive the economic growth trajectory. Keeping the interest rates high to solve the structural supply side constraints has increased the economic vulnerabilities and there has been little respite to inflation," PHD Chamber President Sharad Jaipuria said.

In its April 1 monetary policy review, the Reserve Bank of India had retained the key interest rate.

"Latest industrial output data shows a decline of 3.7 per cent in manufacturing in February 2014. Along with growth of the industrial economy, we also have on stake sufficient employment generation," Ficci President Sidharth Birla said.

Retail vegetable prices increased 16.8 per cent in March as against a 14.04 per cent rise in February. Prices of fruits rose 17.19 per cent compared with a 15.79 per cent increase in February.