Fall In Inflation Due To Dip In Global Commodity Prices: Ex-FM

New Delhi: Attributing the decline in inflation to a fall in global commodity prices, former Finance Minister P Chidambaram said the Government should persuade the RBI to cut interest rates if it believed the price situation would continue to improve.

Dismissing the contention that the decline in inflation was on account of the steps taken by the NDA Government, Chidambaram said he wanted to know “what measures were taken by the Government that contributed to the decline in inflation rates.”

The September WPI inflation fell to a five-year-low of 2.38 per cent on the back of declining food prices, prompting the Government to assert that India is heading towards a “low and stable” price regime. The retail inflation (CPI) for the month too has fallen to 6.46 per cent, the lowest since the Government started releasing the new CPI series in January 2012.

“...I too rejoice in the decline in inflation, but we must ask ourselves what has caused this happy development.

“The main reason is the decline in commodity prices worldwide, especially the price of crude. Another key reason is the Government’s willingness to stick to the fiscal deficit target of 4.1 per cent for 2014-15, originally set in the interim Budget (by the UPA),” Chidambaram said.

The former Finance Minister further said if the Government believed “that the decline in the rates of inflation will prove to be a secular decline, it should persuade the RBI to cut the policy rates.”

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