Focus on agri reforms to keep inflation under control: Industry

India Inc today said the incoming government must introduce reforms in agricultural sector to keep inflation under check even as drop in prices of food items as well as fuel brought down April WPI inflation to 5.2 per cent.

"We believe the coming should focus on agricultural reforms by augmenting storage, providing infrastructure and minimising wastages. Improvement in agriculture scenario will lead to lower inflation and solution to various macroeconomic vulnerabilities," PHD Chamber of Commerce President Sharad Jaipuria said.

The inflation, measured on Wholesale Price Index (WPI), was at 5.7 per cent in March.

"Addressing supply side constraints pose the biggest challenge to the new government. Many bulk products, especially the agriculture produce, are perishable and require fast-moving supply lines," Assocham Secretary General D S Rawat said.

"This needs the scrapping of the Agriculture Produce Marketing Committee (APMC) Act, thereby allowing farmers to sell their produce freely. Similarly, taxes and commissions on agriculture products in both their raw and processed forms need to be minimised," he added.

The overall inflation in the vegetables segment eased to 1.34 per cent in April from 8.57 per cent in March. Fruits were marginally costlier in April as compared to March.

The WPI data showed easing inflation in fuel and power segments as well as the manufactured items group, which include sugar and edible oils. The rate of price rise in the fuel and power segment was 8.93 per cent in April, as against 11.22 per cent in March.

"The headline inflation has shown a dip on the back of moderation in prices of food articles, fuel and power. Given the recent increase in the diesel prices and uncertain outlook for monsoon, price movements will have to be critically watched going ahead," Ficci President Sidharth Birla said.

"For the new government, this would be the single biggest challenge. We look forward to a comprehensive action plan to tackle this situation," he added.

Inflation based on Consumer Price index, on the other hand, had shot up to a three-month high of 5.59 per cent.

The RBI takes into account both inflation metrics for monetary policy.

"RBI must ensure that the cost of finance to the end user becomes competitive," Rawat said.

The Reserve Bank is scheduled to unveil its next monetary policy review on June 3.

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