MADRID, May 4, 2008 (AFP) – India’s inflation rate, which jumped to a more than three-year high last month, is a “big concern” for the government as it heads towards a general election due by May 2009, Indian Finance Secretary Subba Rao said Sunday in Spain. “I must say inflation has been a concern, inflation is a concern, in a country where about 25 percent of the population is poor,” he said at a meeting of the Asian Development Bank in Madrid.
“Of course in a pre-election year in a democracy it is a big concern but I think the government is doing everything possible to manage inflation,” he added.
India’s annual inflation rose by over two-tenths of a percentage point to touch a 42-month peak of 7.57 percent for the week ended April 19, up from 7.33 percent a week earlier, official data released Friday showed.
The new inflation rate, which was fueled by rising food and energy prices, exceeded analysts’ forecasts of around 7.40 percent and was far above the Reserve Bank of India’s declared comfort level of 5.50 percent for the current financial year to March 2009.
Rao said the Indian government spent the equivalent of about 2.0 percent of gross domestic product on subsidies for food, fertilizer and energy to help offset the impact of risi