Please don't panic - PC

A day after India’s inflation rate touched its 13-year high of 11.05%, Finance Minister P Chidambaram on Saturday sought to restore calm, assuring the government was taking necessary steps to quell inflationary trends.

Immediately after meeting RBI Governor Y V Reddy, who also met Prime Minister Manmohan Singh, Chidambaram said, "We should not give room for panic.”

The minister said the food situation in the country was comfortable, adding the government will use wheat, rice stocks to help bring down food prices. The government will provide enough wheat and rice through PDS, he assured.

The FM noted that it was soaring global crude oil prices that were driving India’s inflation up.

Finance Secretary D Subba Rao too tried to pacify concerns saying the pace of inflation was coming down, noting manufacturing inflation was rising by only 0.3%. Government figures showed manufacturing inflation was at modest 3 percent. Also, inflation excluding oil had slowed to 0.2% from 2.6%.

The Finance Ministry said inflationary pressures would persist for some more months even if prices didn’t go up. Price management will be priority in a trade-off between growth and inflation, the ministry added.

Rao further said they were expecting the RBI to take monetary policy action to curb inflation. There is no painless adjustment, somebody has to bear the cost, he added.

In a statement circulated to the media by the Finance Secretary, Chidmabaram said he had met the Prime Minister last night even as the political parties, including the Left allies, pilloried for what they called failure in management of prices.

Chidambaram also met Congress president Sonia Gandhi today to appraise her of the situation and the steps that were being taken to tackle inflation, 94 percent increase in which was due to hike in fuel prices.

During his meeting with the Prime Minister, RBI Governor Y V Reddy is understood to have discussed steps needed to be taken to control the prices.

Reddy’s meeting with Singh lasted for about 15-20 minutes, sources said, but details were not available.