JOIN US"...of course monsoon is perennially a challenging kind of thing but the fuel prices is a big challenge. We hope that will come down in due course of time... and as far as food structural factors (are concerned) inflation going up is an area which is a grave concern," Department of Economic Affairs Secretary R Gopalan said at a CII conference here.
His comments come a time when the government has declared inflation control as one of its major focus area. Headline inflation in the country has been above 8 per cent since February 2010.
Inflation was 8.31 per cent in February this year, the latest data currently available. Food inflation has also been in the double-digits for most of last year.
The Reserve Bank has already revised its inflation projection for March-end, 2011, to 8 per cent from the earlier 7 per cent.
The apex bank has hiked its key-policy rates eight times since March 2010 to tighthen liquidity supply as a means to curb inflation.
Multi-lateral agency ADB had earlier this month projected inflation to be around 7.8 per cent in 2011-12, much above the Government's comfort zone of around 5 per cent.
Gopalan said inflation is still not in acceptable levels though it is going down.
Global banking giant StanChart has also projected India's average rate of price rise at 7.9 per cent this fiscal.
While food items, which make up around 15 per cent of the overall Wholesale Price Index (WPI) basket, were the major contributors of the inflationary pressure for some time, rising crude prices have now put renewed anxieties.
At a time when the foodgrain production, specially of wheat and pulses, is expected to touch record numbers in the 2010-11 crop year (July-June), political unrest in Middle East and North Africa has driven global crude prices to over USD 100 per barrel.
However, agriculture in India being predominately rain-fed, Gopalan's words seems to point towards the challenge due to any disruption in the monsoon.
The DEA Secretary also said that work has started on guidelines for an infrastructure debt fund to help the core sector meet its financing requirement which has been pegged at USD 1 trillion during the 12th Plan period (2012-17).
"This is an area where Planning Commission initially started the work. We want to create the fund which are generic in nature and which in some sense will need to be one fund, can be two or three funds. It can also be more than that since our requirement for funding will be USD one trillion in 12th Plan," Gopalan said.