(a) whether the World Bank has warned that the easy money policy
coupled with mounting Government borrowing in India could lead to rise in prices in the near future;
(b) if so, the reaction of the Government thereon; and
(c) the steps taken by the Government to check the rise in the prices?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI BALASAHEB VIKHE PATIL)
(a)and (b): `Global Economic Prospects and the Developing
Countries 2002` published by the World Bank mentions that
monetary stance in India at present is expansionary, indicating,
perhaps, higher inflation in the near future. It also notes that
fiscal position in India has been highly expansionary in recent
years. Keeping in view the sound fundamentals of the economy
as reflected in moderate inflation, large foodgrain stocks,
and high foreign exchange reserves, the monetary policy stance
continues to lay emphasis on provision of adequate liquidity
while keeping a vigil on inflation. It is the constant endeavour
of the Government to contain fiscal deficit of the Centre and
a comprehensive legislation in this regard was introduced in
the Lok Sabha in December 2000. The Fiscal Responsibility and
Budget Management Bill, 2000, seeks, inter alia, to reduce the
fiscal deficit. The Budget 2001-02 emphasizes expenditure
management through, among other things, structural changes
in the composition of Central Government expenditure and economy
in non-plan revenue expenditure.
(c) The current fiscal year started with an inflation rate of
5 per cent, which decelerated to reach a two-year low of 2.4 per
cent by November 24, 2001. Concerted efforts are being made to
ensure adequate availability of essential commodities of mass
consumption at reasonable prices. The demand side measures include
regular monitoring of monetised deficit and broad money (M3) growth.