Mumbai: The country will continue to face inflationary pressures due to the high global commodity and oil prices, Finance Minister Pranab Mukherjee said on Saturday.
"We are told that there could be pressure on commodity prices because of shortage in production of certain essential food items," Mukherjee told reporters on the sidelines of the 63rd annual general body meeting of Indian Banks Association in Mumbai.
"When there is uncertainty in the global markets, particularly on those products for which we have to depend through imports, naturally it would affect," he added.
He further said, "Inflationary pressures have no predictability or a certain direction. Like in 2008 when oil and commodity prices shot up and then declined drastically, commodity prices remain unpredictable today. It is too unpredictable, nobody can comment on how these will behave".
However, he added quickly that his government along with the Reserve Bank are trying to achieve higher growth and bring down inflation to acceptable level.
"By constantly adjusting the policy, both from the supply side and the demand side and by taking appropriate fiscal policies in tandem with the RBI, we are trying to achieve high growth and acceptable levels of inflation," Mukherjee said.
Headline inflation came a tad down to 8.66 per cent in April from 8.98 per cent in the previous month, while the weekly food price index dipped to an 18-month low of 7.47 per cent for the week ended May 7 from the previous week when it stood at 7.70 per cent.
To a question on the key financial sector reform bills, the Finance Minister said, "I do hope other political parties support these two important reform measures (Pension Regulatory Bill and Insurance Bills which were tabled in Parliament in the Budget session).
We are also awaiting reports of the standing committees on these bills".
"The other reform measures will also be taken up in the monsoon session," Mukherjee said.
During the speech, the Minister expressed concern over rise in bad assets of banks, especially of the state-run lenders.
"The asset quality of the banks is a matter of concern. Banks have to bring down their NPA levels to the pre-crisis levels, which have gone up in 2010 considerably," Mukherjee said.
The banking sector as a whole did not report good numbers for March quarter on rising NPA coverage ratio, after the Reserve Bank asked them to reach a provision coverage ratio of a 70 per cent by this September.
State Bank of India, the biggest lender in the country, reported a huge 99 per cent drop in its net profit for the March quarter at a paltry Rs 20.8 crore on higher provisioning for bad loans as well as a special one-time coverage for its popular teaser home loans and high coverage for pension.
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