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Rajya Sabha
Containment of inflation remains high on the agenda of the government. Anti-inflationary policies of the government include strict fiscal and monetary discipline, rationalisation of excise and import duties of essential commodities so that there is no undue burden on the poor, effective supply-demand management of sensitive items through liberal tariff and trade policies and strengthening the public distribution system.
Government of India has taken specific measures to contain inflation . These include:
On june 15, 2004, government reduced excise duties on selected petroleum products to keep their domestic retail prices in check in the face of rising international prices of oil. Excise duty on petrol was reduced from 30 per cent to 26 per cent, that on high speed diesel from 14 per cent to 11 percent and that on liquefied petroleum gas (LPG) from 16 per cent to 8 per cent;
On August 18, 2004, government reduced further excise and customs duties on selected petroleum products. Customs duty on petrol, diesel, LPG and kerosene were reduced by 5 per cent each, while excise duty was reduced by 3 per cent each for petrol and diesel and by 4 per cent for kerosene;
On August 20, 2004, government reduced customs duties on non-alloy steel and ships for breaking to 5 per cent from 10 to 15 per cent respectively in order to check high inflation in metals and metal products. Melting scrap of iron and steel was fully exempted from customs duty;
To check the liquidity overhang in the system, the Reserve Bank of India (RBI), on September 11, 2004, hiked the cash reserve ratio (CRR) to be maintained by banks, by 50 basis points to 5 per cent of their demand and time liabilities;
In a bid to control the prices of edible oils and make its availability easy, the government on September 16, 2004 cut tariff values on many vegetable oils by around $50 a metric ton;
In its Mid-Term Review of the Annual Policy Statement for 2004-05 announced on October 26, 2004, the RBI hiked the reverse repo rate (i.e. the interest rate paid on bank funds placed with the RBI against government paper) by 25 basis points to 4.75 per cent; and
As there was a fall in the international prices of crude oil, oil companies reduced the prices of petrol by up to Rs. 1.26 per litre with effect from November 15, 2004.
Partly as a result of various fiscal and monetary measures taken by the Government, the annual point-to-point inflation in terms of the Wholesale Price Index (WPI) has come down from the peak level of 8.7 per cent reached on 28th August 2004 to 7.3 per cent as on November 20, 2004.
This information was given by Shri S.S. Palanimanickam, Minister of State of Finance in reply to a question by S/Shri R.P. Goenka, Lalit Suri & Karnendu Bhattacharjee in Rajya Sabha today.
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