Friday, September 9 2005 18:24 Hrs (IST) - World Time -

New Delhi: Amid fears of a rise in general price level in the wake of fuel becoming costlier this week, Finance Minister P Chidambaram today (September 9, 2005) said the government and Reserve Bank would take necessary steps to contain inflation even though it fell to over 3-years low of 3.01 per cent.

"Both the government and RBI will take necessary steps to contain inflation," Chidambaram said after a meeting with state ministers on cooperative revamp here.

The statement assumes significance as experts fear that the petrol and diesel price hike on September 6 would impact the general price level.

The impact of the hike in petrol prices by Rs 3 a litre and diesel by Rs 2 a litre would be felt only after 2-3 weeks.

The inflation has been falling in the last few months mainly due to prudent management of money supply by the RBI, fall in prices of essential commodities and "base year effect" that came into play as inflation was over 8 per cent during the same time last year.

Though Chidambaram was not complacent on the price front, he exuded confidence of keeping the government's market borrowings within limits.

"I don't see any reason to plan additional borrowing. Let's see the revenue and expediture positions and then we will decide," he said.

Centre's gross market borrowing has surged by 62 per cent to Rs 89,000 crore till September 2 this fiscal from Rs 55,000 crore in the same period last fiscal. It was slated to raise another Rs 8,000 crore within a few days.

Net borrowings, after redemption of securities worth Rs 36,018 crore, rose by three-fold to Rs 52,982 crore till September 2 as against Rs 17,224 a year ago.