According to R. Seshasaye, president, Confederation of Indian Industry (CII), the industry body is concerned about inflation, While a moderately high inflation can be expected to accompany a high growth economy, however, CII is particularly concerned with the sustained price pressure from primary articles, which is fuelling the high rate of inflation. CII hopes that the government would take necessary action to address this supply side issue. The government had last week said that some of the companies are responsible for the increase in prices and the companies reacted to it by saying that there was no evidence to support the governments claim.
Industry bodies attributed the rising inflation to mismatch in supply- demand conditions of essential commodities.
The Assocham expects the inflation rate to exceed further at least for 2-3 months until supply demand management is managed by government interventions, said president, Assocham, Venugopal N Dhoot. It has therefore suggested corrections in RBIs forthcoming monetary policy by making adjustments in both repo and reverse repo rates. Says GR Gopinath, MD, Air Deccan, The rising inflation will have an impact, but the situation is not very scary. However, for the aviation industry, this may lead to an increase in fuel prices and higher service charges. This may in turn lead to a rise in airfares.
The industry chambers also wanted the government to take steps for increased capacity building in order to build the supply-demand shortfall. According to Vivek Bharti, advisor, Ficci, The high inflation figures suggest that the economy has run into supply-side bottlenecks in agriculture as well as industry. The government should take steps towards facilitating investment in these sectors, he said.