Food inflation may be result of growing prosperity: Manmohan

Cannes : Prime Minister Manmohan Singh Friday said inflation in food articles in India was, indeed, a problem but said that grain prices have been relatively stable. He also ruled out a roll back in the decision to decontrol petrol prices.

“What prices are going up are prices of vegetables, prices of eggs, prices of fish, that is the secondary and tertiary food items. That is a reflection of the demand for these commodities exceeding supplies,” the prime minister said.

“That in turn, to some extent at least, is a sign of growing prosperity of our country. If our national income increases by 8 percent per annum and our population is increasing at 1.6 percent per annum, the per capita income is growing at 6-6.5 percent,” he said.

“It is bound to lead to a demand for more diversified type of food basket. I am not saying this is a fool proof way of describing this complex reality, but in analyzing food inflation, I think, this is an aspect that should not be lost sign of,” he told a press conference here.

Asked about is reaction the protests back home over the recent hike in prices of petrol, the prime minister also said the decision to decontrol these prices was a part of the process to ensure fair play in commodity markets.

“That is the general direction in which we should move. The decision to decontrol petrol prices was part of that process,” said the prime minister, here for the two-Day G20 Summit that concluded Friday.

“These are very sensitive areas and I have no hesitation in saying that we must allow markets to find their own level, except for those commodities which are in the nature of semi-public goods.

“The direction of decontrolling prices was clear,” he said, adding prices of more fuels may also be decontrolled.

The comments come against the backdrop of oil companies hiking petrol prices by Rs.1.80 a litre, effective Friday. Finance Minister Pranab Mukherjee had already defended the move, even as opposition slammed the government.

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