India says no plans to reallocate Union Budget outlays, rejects reports of Rs 1-trillion inflation package

The Indian government has no plans to reallocate the Union Budget outlays and rejected the reports as baseless on the Rs 1 trillion package to fight inflation, sources privy to the developments told CNBC-TV18.

According to multiple people familiar with the development, the government expects inflation to trend lower in the coming months as the consumer price index (CPI) inflation may ease on negative wholesale price index (WPI) inflation.

Further, the government said the rise in vegetable prices is transient and will not last for a longer period of time. Also, there is not much scope to take steps to curb food inflation as the government is already doing what needs to be done to reduce food inflation, the government sources said.

Open Market Sale Scheme (OMSS) for wheat and rice along with government interventions to sell tomatoes at lower prices are the only options that are left with the government to fight food inflation. Alternatively, the government can increase the frequency and quantum of market interventions in order to provide some relief to consumers.