Montek Singh Ahluwalia said - from January 2010 you will see a decline a food prices. What you see now is speculative, probably due to the drought situation. The stock situation is relatively OK. Problems such as this cannot be tackled by blunt instruments like monetary policy."
Price increase at the retail level is much more than the increase at the wholesale level. This is because of dysfunctionality in the distribution system. The ministry is looking into it, but whenever required, the country should do imports.
India's food-price inflation cannot be tackled through monetary and other policy steps, while inflationary expectations will not stay long. Earlier India's central bank may have to raise the cash reserve ratio (CRR)
to drain money from the banking system if prices do not decline in December.
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