•What is driving inflation now?There are several factors. One is clearly the food prices that have risen very sharply. In fact, when you look at our own food prices, it is not as bad as many of our neighbours. We have had double-digit food inflation though it is not like the 30-40 per cent in China and Vietnam. The second is the rise in commodity prices globally that is being passed on to domestic products. But there are certain gaps in our system because of ‘disguised inflation’. For instance, even though the price of oil is above $100 a barrel, the benchmark here is around $50 or $55. The actual situation maybe somewhat worse than what the indices point to.•Do you think the government is doing enough to control price rise and inflation?What the government has done so far in terms of trade, export restrictions, lowering of duties are necessary steps and fall in line with the anti-inflationary policy. It is difficult to predict its impact because the drivers may be too strong and you cannot bring the duties below zero. So there have to be other measures, which buffer its impact. But there are other long-term issues that need to be addressed, for example, the report of the M.S. Swaminathan on the National Commission of Farmers. Subtle reforms will improve food productivity and distribution. Agriculture is one unreformed sector that has to be addressed sooner or later. •By when do you think will the government’s actions begin having an impact?There is no guarantee that the actions taken by the government will bring down inflation. I would like to emphasise that it’s a global phenomenon not unique to India. Whenever we have had food supply problems, we imported. But this time, since it is a global problem, nobody is going to export food. A reasonable monsoon will see a reasonable rice crop and that will ease the pressure somewhat in the latter half of the year. If that happens, I see some moderation in food prices over the next few months.
