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This is an archive article published on April 12, 2008

Inflation in India a politically hot issue: IMF

The IMF asked Indian Govt to take immediate steps to arrest prices before the problem becomes entrenched and spills over.

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Describing the soaring inflation in India as ‘a politically hot issue’, the International Monetary Fund (IMF) asked the Indian Government to take immediate steps to arrest prices before the problem becomes entrenched and spills over.

Referring to the recent IMF reports on global and regional economy which said inflation was on the higher side and requires immediate attention, senior advisor in the IMF Asia and Pacific Department Kalpana Kochhar said, “at 7.5 per cent (inflation rate in India) it may not seem very high but politically it is a hot issue”.

Kochhar said, “it was mainly due to food, fuel and some metals. Activities have come off a fast pace but are still pretty strong.” It was critical to deal with the issue of inflation before it becomes entrenched and spills over, she added.

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The annual rate of inflation in India which was below 4 per cent in January soared to 7.41 per cent towards the end of March and is expected to move up further before beginning to cool down. Rising prices forced the government to take host of steps including banning export of non-basmati rice, pulses, edible oil and cement to contain inflation.

High inflation rate has already taken a political tinge in the country with the opposition Bharatiya Janata Party and Left allies accusing the government of its failure to check price rise.

Also, the issue is likely to caste a shadow on the upcoming Assembly elections and finally the general elections scheduled early next year.

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