New Delhi: Sharing the concerns of the common man, home minister P Chidambaram on Wednesday said “there is no tax worse than inflation”, but wondered whether the government has all the tools to rein in high food prices.
Chidambaram, who held the finance portfolio under the UPA-I government, said inflation eats away the income of the families even if they are earning more.
Food inflation rose to a 10-week high of 14.44% for the week ended 18 December, mainly on the back of high prices of onions and other vegetables. Onion prices increased by almost 40% on an annual basis, touching Rs75-80 per kg in the retail market.
Overall inflation stood at 7.48% for the month of November, 2010.
“... Not sure whether we understand all the factors that contribute to price rise. Nor am I sure whether we have at our hand all the tools to control inflation,” the minister said.
However, he hastened to add, “Some say we do, some say we don’t (have tools to check price rise). At least in case of food inflation, I have not heard any one arguing convincingly that we have all the tools to control food inflation.”
Admitting that it was the duty of the government to maintain price stability, he, however, said “Some administrative prices have to be corrected.”
His remark came in the backdrop of the government postponing indefinitely a fuel (diesel) price hike despite soaring crude oil rates.
“I believe that price stability is extremely important, specially in a poor country. There is no tax worse than inflation. All that you gain in the strings is lost in the roundabout,” he said.
Be it cars, tyres and CNG or consumer durables like refrigerators, washing machines or microwave ovens, manufacturers across different sectors have raised prices in the last 10 days, citing an increase in raw material costs.
The hike in prices of these items was over-and-above a rise in the rates for milk, onions, garlic and other vegetables, which have become expensive in the past few weeks.