New Delhi, July 13: Finance Minister P Chidambaram has said that government could not continue to reduce taxes on various items to contain inflation but there was a need for moderating demand of affluent sections to curb rising prices.
Referring to 13-year high inflation that touched 11.89 percent for the week ended June 28, he said at the moment the government was relying on monetary steps to moderate demand.
"The best instrument to reduce aggregate demand is monetary policy. That is why the RBI, the monetary authority, is the first line of defence," he said.
On fall in GDP growth prospects in 2008-09, he noted had there been no turbulence in the international market, it could have been 9 percent. However, he said the growth during the current fiscal would above 8 percent.
Referring to soaring crude oil prices, the Finance Minister pointed out no one had expected oil prices to go up beyond 100 dollars a barrel to USD 146 a barrel adding the country would be able to "weather the shortage too."
Asking the people to curtail energy consumption to fight with rising oil prices, he said, " We have to tighten our belts very seriously, we have to adopt very strong conservative measures."
On the turbulence in Indian stock markets, Finance Minister said: "If the markets are rising it has to be an orderly rise, if there is a fall it has to be an orderly fall."
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