Awwal 21, 1432 H/Feb 24, 2011, SPA -- Indian Prime Minister Manmohan Singh vowed on Thursday to control inflation, a problem that sparked protests this week and has added to pressure on a government under fire over corruption scandals, according to Reuters. The rate of food inflation in India is among the highest in Asia, and it accelerated slightly to the middle of February despite projections that price rises would ease to single digits. Singh said inflation had become a problem in the last 18 months and suggested next week's budget could include measures to revamp an archaic public distribution system that is seen as a supply-side bottleneck contributing to price rises. He also said the government hoped to introduce a bill to offer cheap foodgrains to the poor in this session of parliament, which could take the edge off voter anger and improving the ruling Congress party's electoral chances. Some economists fear that policies to protect consumers from high inflation such as fuel and food subsidies and the food security bill will derail government plans to keep the budget deficit under 4.8 percent of gross domestic product in the next fiscal year that starts on April 1. "Our government stands committed to control inflation," Singh told parliament, adding that he would bring a food security bill to parliament soon. "The government's function is to ensure that we control inflation but in a manner which we do not hurt the growth of employment opportunities." "The only way we can control inflation is through increased production and increased productivity of agriculture." POPULIST BUDGET EXPECTED India's food index rose 11.49 percent in the week ending on Feb. 12. The fuel price index climbed 12.14 percent in the year to Feb.12, higher than the previous week's 11.92 percent, government data showed on Thursday. Singh said headline inflation would ease to 7 percent by end-March, from 8.23 percent in January. Overall headline inflation remained stubbornly high at more than 8 percent in January despite seven rate increases by the central bank since March, with more tightening expected at the bank's mid-quarter policy review in mid-March. Finance Minister Pranab Mukherjee is expected to announce a populist budget on Monday ahead of a series of state elections that are seen as a key test of support ahead of a 2014 general election. On Wednesday, about 100,000 trade unionists, including those from Singh's Congress party, marched in the capital to protest against high inflation. Police in New Delhi battled on Thursday with batons, water-cannons and tear gas against hundreds of members of the main opposition Bharatiya Janata Party protesting against corruption and high food prices.
