Raising prices sensibly can reduce inflation

The Kelkar Committee report has painted a dire picture of government finances. It emphasizes the need to phase out unwarranted subsidies (such as those on diesel, cooking gas and urea) while maintaining warranted subsidies (on education, health, food) and targeting the poor. The committee has warned that India must curb its high fiscal deficit, which is spilling over into a record trade deficit. Critics sneer that the committee has ignored the inflationary consequences of its proposals.

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