The government ordered the sale of stocked grain and extended duty-free sugar imports by another nine months, hoping to rein in high food inflation and head off the need for raising interest rates.
An 11.7% surge in industrial output in November, the fastest in two years, following rapid economic growth in the September quarter, has sparked concern the central bank would tighten policy later this month to temper inflation expectations.
The government, struggling to tame food inflation hovering near 20% in December, said the country had adequate grain stocks, ruling out rice imports that seemed likely after the worst monsoon in 37 years ravaged paddy fields in 2009.
Farm Minister Sharad Pawar said duty-free imports of white sugar would be extended by nine months to December 31 as New Delhi looks to cover a supply shortfall for the second consecutive year in the world's biggest consumer of the sweetener.
He also said the government would release up to three million tonnes of wheat and rice in the open market, and ask more official agencies to retail grain.
"With the measures we have taken, the prices of essential commodities are expected to start coming down in seven to 10 days," Pawar told reporters after a cabinet panel reviewed food prices.
Separately, Finance Minister Pranab Mukherjee said Asia's third-largest economy was likely to grow about 7.75%, higher than the government's earlier estimate of 7% and the central bank's forecast of 6% "with an upward bias".
Last week, official data showed that food prices climbed 18.22% in late December, just off an annual rise of 19.83% a week earlier.
Mukherjee said high food inflation as well as rising expenditure for supplying subsidised fertilisers to farmers were major areas of concern.
Source: ReutersCourtesy moneycontrol.com
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