Good monsoons may rein in price rise: Govt

KEEPING A CHECK ON INFLATION: Met Department says the 2008 monsoon will be better than normal.

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New Delhi: The Reserve Bank of India (RBI) is now warning a rate hike to try and keep prices in check. Meanwhile, Finance Minister P Chidambaram issued a threat to cartels as well.

“I am ready to go on record to say that the steel and cement manufacturers are cartelising to fix prices and exploiting the demand supply mismatch,” Chidambaram said while defending the Government's position on inflation in Lok Sabha on Wednesday.

Chidambaram’s ire was clearly directed towards the steel and cement lobby, which have disregarded several dictats by the Government to rein in prices. The Finance Minister also hinted at the need to moderate demand. So expect a tighter monetary policy on the April 29.

“Definitely the level of inflation is unacceptable to us. It is higher than our tolerance limit. We are having a meeting of the Monetary Policy Advisory Committee and we expect to make an announcement for our monetary policy on April 29,” Governor of RBI, Y V Reddy said.

But it’s not all bad news. In the midst of an economic cloud there is perhaps one small ray of hope for the Government with the Met Department saying that the 2008 monsoons will be better than normal.

“The long-range forecast for 2008 say that the rainfall for the country as a whole is likely to be near normal,” Minister for Science and Technology Kapil Sibal said.

The good monsoons could mean some respite from rising inflation with a higher food grain production bringing down prices, which are rising by the minute.

(With inputs from Indira Kannan and Swati Khandelwal)