New Delhi: Expressing concern rising food prices, Finance Minister P Chidambaram on 3 March defended his budget proposal of waiving farm loans and rejected criticism that the budget has forgotten the corporate sector.
“One of the reasons why inflation is still a threat is food prices in India,” Chidambaram said, adding that after a long gap India has become a marginal importer of foodgrain, which is a dangerous omen.
“Because we are dependent on import, we are subject to world prices... No country with as large a population as India can be dependent on imports (of foodgrain),” he said at the post-budget interactive session with industry chambers.
Since April 2007, wheat prices in the global market have risen 88%, while rice has risen 15%, he said.
“Taking all this into consideration, we came to the conclusion that farmers distress calls for unorthodox response... response was farm loan waiver,” the Finance Minister said.
The wholesale price-based inflation rose to 4.89% for the week ended 16 February from 4.35% the previous week.
Responding to issues raised by the corporate sector, he said: “I have not forgotten the corporate sector. Despite the advice given by my Chief Economic Advisor and suggestion from Economic Survey, we accepted your (corporates) demand of retaining peak customs duty rate.”
He said excise duty reductions and relief given in personal income tax would help in spurring demand for consumer goods and benefit the industry.