The government would take necessary fiscal and monetary measures to bring inflation down to a “tolerable”  level of 4 to 4.5 per cent, Finance Minister P Chidambaram asserted in the Lok Sabha on Thursday.
“We will take all necessary measures — fiscal and monetary — to moderate inflation. We will continue taking steps to remove supply constraints affecting the availability of essential commodities,” he said in reply to a two-day-long discussion on price rise. 
Mr Chidambaram, whose speech was constantly interrupted by members of the Left Parties and the Opposition benches, tried hard to convince the House that the UPA government was taking all measures to bring down inflation below five per cent and later between 4 and 4.5 per cent, a tolerable level as suggested by the RBI. 

Walk-out
However, members of the Left Parties and the Opposition benches staged a walk-out saying that Mr Chidambaram was defending the ongoing phenomenon of price-rise.  Former prime minister and veteran BJP leader Atal Behari Vajpayee and Leader of Opposition L K Advani did not join.
According to Chidambaram, the global phenomenon of rise in prices of primary products has contributed to price rise. The worldwide increase in commodity prices, including crude oil and metal prices had risen by about 11 per cent. Also, the supply-demand mismatch in essential articles contributed to price rise, Mr Chidambaram explained. 
The supply-demand mismatch can be attributed to the stagnation in production of wheat, paddy and pulses over the last 10 years.
“There is continuous rise in public expenditure and justifiably so, in view of the flagship programmes and the Common Minimum Programme commitment to increase expenditure in the social sector including education and health,” he said.
The higher rate of growth of GDP has stimulated higher demand for goods and services, Mr Chidambaram said. This is reflected in a high growth of credit as well as in the fact that many industries are working at near full capacity. The large capital inflows have also increased the money supply beyond the normal level. 

Steps taken
Mr Chidambaram explained the steps being taken by the government to contain price rise. 
On the fiscal policy front, the government has reduced customs duties and excise duties on a large number of goods of mass consumption like wheat, pulses and edible oil.  On the monetary policy side, the RBI has taken a number of measures to moderate demand and credit growth. 
Mr Chidambaram also reeled out statistics to prove that inflation level during the NDA regime was high.