A delegation from industry body Assocham met Prime minister Manmohan Singh to discuss the issue of rising inflation which has crossed six per cent.

According to a press release from Assocham, Singh shared their concern over the inflation rate and suggested that industry concentrate on enhancing supplies to tame inflation.
According to the release, the PM is of the view that the situation caused due to inflation could be easily tackled, if industry hastened the process of adding capacities and strengthening supplies.

During the meeting, Assocham opposed iron ore exports and spoke of strengthening the base of domestic steel industry.

Another industry body, FICCI, says the current inflation of over 6 per cent was an inevitable offshoot of high growth and said the government would have to adopt a twin long-term strategy to combat the bottlenecks in the supply of primary articles and manufactured products.

"The current inflationary pressures is an inevitable offshoot of high growth and market forces in due course would correct the upward bias in prices," a FICCI study says.

It added that speed and effectiveness of the current inflationary pressure would critically hinge on the agriculture sector's ability to scale up to meet the huge demand for primary goods and the removal of supply side rigidities impeding the growth and competitiveness of Indian industry.

The spurt in food prices is an upshot of the huge demand for food articles generated by the increased purchasing power of people, which in essence demonstrates the income effect of growth. The near stagnation in food production in the recent past has only accentuated the situation.

The FICCI study on current inflationary trends notes that after hovering within the range of 5-5.5 per cent during august-December period last year, the annual rate of inflation has scaled to a high of 6.12 per cent in the week ended January 6. It later dipped slightly to 6.11 in the week ended January 20, thus surpassing the inflation tolerance band fixed by the RBI.