Quick steps to curb inflation could push key rates: Basu

Chief economic advisor Kaushik Basu spread a word of caution- any immediate measures to tame inflation would result in cascading effect. This implies a significant increase in the interest rates which would subsequently affect the whole industry.

Looking at some statistics-inflation stood at 10.39% for the week ended February 19 as against 11.49% in the previous reporting week and 21.62% in the corresponding period a year ago. The reason behind fall in food inflation was due to decline in prices of onions, potatoes and pulses. But according to Basu the comfort zone remains to achieved yet amid escalating prices of fruit, milk and vegetables.

"The current inflation in food is unacceptably high. We have to work towards bringing this down. But we cant just do that in 2-3 weeks because that would result in interest rates going sky high or leading to closure of factories. It has to be through measures and steps," Basu said while addressing a CII event.

Basu also called for using the provisions of the competition law to ward off evil practices in trade such as cartelisation to bring down the prices.