FINANCE MINISTER (SHRI P. CHIDAMBARAM)
(a) to (e): A Statement is laid on the Table of the House.
STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. 39
BY SHRI ARVIND KUMAR CHAUDHARY AND SHRI GANESH SINGH DUE FOR ANSWER ON 6TH DECEMBER, 2013
(a) to (e) Cross country comparisons of levels of inflation needs to be made
with caution as the nature, scope and methodology of the indices used as well
as the structure of domestic markets differ. For instance, Central Statistics
Office, Ministry of Statistics and Programme Implementation has been publishing
the comprehensive consumer price index of inflation (new series) only since
January 2011. There are other consumer price indices available for sections of
the populace like Industrial Workers, Agricultural Labourers and Rural
Labourers. It is in this context the wholesale price index measure of inflation
has been important in any analysis of overall inflation. The World Economic
Outlook of the International Monetary Fund (IMF) gives details of consumer
prices for various countries. As per the IMF, inflation as measured by
consumer price index (CPI) in India was lower than Bhutan and Pakistan, while
it was higher than other neighbouring countries (Bangladesh, Nepal, Sri Lanka
and China) in 2012 (Table 1). CPI inflation remained high in India in 2012 due
to elevated food inflation especially food grains, edible oils, egg, meat &
fish, milk and vegetables and non-food items like pan, supari, fuel & light
and services.
Table 1: Consumer Price Inflation (Per cent)
Country 2009 2010 2011 2012
Pakistan 17.6 10.1 13.7 11.0
Bhutan 4.4 7.0 8.9 10.9
India 12.4 10.4 8.4 10.4
Bangladesh 5.4 8.1 10.7 8.7
Nepal 12.6 9.5 9.6 8.3
Sri Lanka 3.5 6.2 6.7 7.5
China -0.7 3.3 5.4 2.6
Source: International Monetary Fund,World Economic Outlook, October 2013
Headline wholesale price index (WPI) inflation declined to a 42 month low of
4.6 per cent in May 2013 and averaged 5.8 per cent in 2013-14 (Apr-Oct) which
is lower than 7.4 per cent in 2012-13. However, CPI-IW inflation increased
from 9.1 per cent in September 2012 to 11.1 per cent in October 2013 (Table 2),
primarily driven by food inflation especially meat, fish & eggs, vegetables &
fruits and non-food items like fuel, medical care and transportation. CPIs
assign higher weight to the food group and, hence, show higher aggregate
inflation on account of high food inflation.
Table 2: Year-on-year inflation based on WPI and CPI-IW (Per cent) WPI inflation CPI-IW inflation 2012-13 2013-14 2012-13 2013-14
April 7.5 4.8 10.2 10.2
May 7.5 4.6 10.2 10.7
June 7.6 5.2 10.1 11.1
July 7.5 5.9 9.8 10.8
August 8.0 7.0 10.3 10.7
September 8.1 6.5 P 9.1 10.7
October 7.3 7.0 P 9.6 11.1
November 7.2 9.5
December 7.3 11.2
January 7.3 11.6
February 7.3 12.1
March 5.7 11.4
Average 7.4 5.8 P 10.4 10.8
Source: Office of Economic Adviser and Labour Bureau. P: Provisional
Government and Reserve Bank of India (RBI) monitor the price situation
regularly, as price stability remains high on their policy agenda. Various
fiscal, monetary and administrative measures have been taken to reduce
inflation. As a result, the composite inflation of 31 essential commodities in
terms of WPI which averaged 10.65 per cent in 2012-13 declined to 9.48 per cent
in 2013-14 (Apr-Oct).
Some of the specific measures already in place include: reducing import duties
for wheat, onion, pulses and refined edible oils; banning export of edible
oils and pulses; imposing stock limits from time to time in the case of select
essential commodities; maintaining the Central Issue Price (CIP) for rice (at
Rs 5.65 per kg for BPL and Rs.3 per kg for AAY) and wheat (at Rs 4.15 per kg
for BPL and Rs 2 per kg for AAY) since 2002; suspending futures trading in
rice, urad and tur; fixing the Minimum Export Price (MEP) of onion at USD 1150
per MT and allocating 195000 tonnes of rice and 327000 tonnes of wheat for
distribution to retail consumers under Open Market Sales Scheme Domestic
[OMSS(D] for the period upto March, 2014. As per Second Quarter Review
(October 29, 2013) of the RBI, the policy stance and measures are intended to
curb mounting inflationary pressures and manage inflation.
An analysis of the drivers of inflation indicate that different items of
consumption has been driving it at different points of time. No specific/
comprehensive study has been conducted on the impact of price rise on demand
of various consumer goods. Detailed data on consumption pattern is available
quinquennially through the National Sample Survey Office’s (NSSO’s) consumer
expenditure surveys. However, Government closely monitors the production and
availability of essential commodities and calibrates appropriate corrective
measures.
