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High fuel prices to impact inflation moderately: FM
By agencies
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Thursday, 15 September 2005, 19:30 IST
NEW DELHI: Finance Minister P Chidambaram today said that high fuel price will have a "moderate" impact on inflation but will not affect interest rates.
"Our economic fundamentals are strong- foreign exchange reserves buoyant, export rising, balance of payment position robust, rupee strong and inflation is moderate. Government revenue till August was according to the budget projection," Chidambaram said.
He said the government wants to maintain high growth by emphasizing more on agriculture, maintaining buoyancy in industrial production and sustaining the high growth in services sector.
According to a Reserve Bank of India projection, the economy is slated to grow by 7 percent this fiscal on the back of 6.9 percent estimated for 2004-05.
On the effect of hike in petrol and diesel prices, Chidambaram said, "It will have a moderate impact." Though WPI-based inflation came down mainly due to "base year effect" as prices were higher last year, Chidambaram said this effect was being witnessed since November.
He also said there was no pressure on interest rates. "No banker has told me that there is problem on the liquidity situation." He said there was no pressure on government finances. "As of now, we don't need to borrow more. In the first half, we have stuck to the budget target."