Sharma asks FM to ensure easy credit to infrastructure and industrial sectors
19 January 2011
Commerce and industry minister Anand Sharma has called for lifting of curbs on credit flows that tended to block investments while not helping to effectively deal with high food inflation, which is largely driven by supply side constraints.
In a letter addressed to finance minister Pranab Mukherjee, Sharma urged him to ensure that the industrial and infrastructure sectors had easy access to credit, as the sectors needed sustained support.
"I am sure that you will be alive to the need of sustained industrial growth while reviewing policy rates," Sharma wrote in his letter to Mukherjee.
"The high inflation in primary articles, particularly vegetables, is more on account of supply side constraints and monetary policy may not be the most suitable intervention to check inflationary pressures."
Meanwhile, the Reserve Bank of India, having already raised interest rates six times in 2010, in its bid to contain inflation, is expected to hike key policy rates by up to 50 basis points in its 25 January monetary policy review.
Food inflation, which was up at 18.32 per cent at the end of December continues to be around the 17 per cent mark, which has put the government on the back with the opposition intensifying pressure. Though the government has announced some measures, analysts feel these would have only marginal impact.