‘No tax worse than inflation’
Union home minister P Chidambaram’s remarks assume significance because both Congress chief Sonia Gandhi and Prime Minister Manmohan Singh have identified high food prices among the top challenges facing the government. Soaring food prices have been a political headache for the UPA government as the opposition has stepped up its protest against stubbornly high prices. High onion and vegetable prices have pushed food inflation to above 14% in mid-December. A worried government has already put the proposal to raise diesel prices on the back burner despite global crude oil prices touching $92 a barrel. In his speech on Wednesday, the home minister said price stability is extremely important particularly in a poor country. “There is no tax worse than inflation.’’ Rangarajan said there is a need to guard against food inflation spreading to other sectors. Price stability has to be the dominant issue for monetary policy. The former RBI governor said the government can deregulate diesel prices when inflation eases. He said monetary policy action would be needed if inflation continues to be sticky.