Price rise: Govt pins hope on monsoon

New Delhi, July 24 (PTI) India's Prime Minister Manmohan
Singh Saturday said normal rains expected this year will help
cool food prices and in turn ease inflation to six per cent by
December from over 10 per cent now.
The prevailing over 12 per cent food inflation and the
recent hike in prices of petrol and diesel had generated quite
a political storm that is expected to hit the monsoon session
of Parliament beginning Monday.
"We expect to see the rate of inflation in wholesale
prices to come down to around 6 per cent by December", he said
here while addressing the National Development Council (NDC),
the highest policy making body comprising Chief Ministers and
the Planning Commission.
Singh regretted that states were not paying due attention
to farm sector -- crucial to curbing inflation.
"This must be corrected if we want to achieve a broad
based improvement in living standards in rural areas. Better
agriculture performance is crucial for food security and would
help in tackling the problem of inflation... present high rate
of inflation is mainly due to food price inflation," he said.
However, Chief Ministers of Bharatiya Janata Party
(BJP)-ruled states said that it was the Centre that had failed
in tackling inflation and that rising prices was making life
difficult for the common man.
"Inflation poses a great threat to the country's
development. In fact, there is a real danger that inflation,
if not effectively tackled, could derail the entire growth
process...," Chief Minister of BJP-ruled Gujarat state in west
India Narendra Modi warned.
"There is a need to understand the constant agony that
millions of people are forced to undergo daily," he said.
Singh, however, hoped that with normal monsoon expected,
food prices would ease in the second half of the year.
Monsoon accounts for around 80 per cent of rains India
receives and nearly 60 per cent of the cultivated land is rain
fed. Two years of poor rains led to an upward spiral in food
prices, the effect of which spread to manufactured goods.
Singh also sought support of the Chief Ministers for
implementation of the Goods and Services Tax (GST) tax regime
considered as the biggest tax reform that would combine
central and states taxes.
"I would urge Chief Ministers to give full support to
the effort to implement GST from April 1, 2011", he said.
The GST would replace excise and service tax at the
central level and VAT at the state-level. The Centre has
proposed a three rate structure -- 20 per cent for goods, 16
per cent for services and 12 per cent for essential items.
On growth, Singh said though the economy would expand by
8.1 per cent annually during the Eleventh Plan period (2007-
12), it would still be the highest-ever achieved any Plan.
The NDC was called to approve the Mid-Term Appraisal
of the Eleventh Plan, which listed power and infrastructure
as areas of concern to attaining 9 to 10 per cent economic
growth. MORE PTI