The Union Finance Minister Chidambaram admitted in the Delhi Economic Conclave in New Delhi that the current inflation caused Congress Government loose elections in four states.
He said, "It is common knowledge that the government of the day will pay a price for high inflation, especially if inflation persists over a long period of time”
He further said, "Laws (Agricultural Produce Markets Act and the Essential Commodities Act) in this behalf are entirely in the domain of the state government. The powers of notification and enforcement under these Acts are with the state governments, yet state governments are loathe to take action under these Acts. I think it is necessary to highlight the inaction of the state governments in this behalf, even while accepting that the central government must do all it can, within its powers, to moderate inflation.”
He said that the inflation is measured by the price index or the wholesale price index which is driven by high food prices especially of fruits, vegetables, meat, fish, egg and milk.
He also said, "The answer to inflation, therefore, especially inflation in food articles, is to increase supplies and to radically transform the manner in which commodities and food articles are stored, transported, distributed and sold in the various markets, especially urban markets.”
The RBI Governor Raghuram Rajan present there said, "No single data or point or number will determine our next move, but our effort is firmly on controlling inflation."