"Economic expansion leads to fiscal deficit. It is leading to the problem of unstable price regime," Mukherjee told the 9th Pravasi Bharatiya Divas here, as India's annual food inflation climbed to a 52-week high at 18.32 percent.
The minister said the sharp rise in global commodity prices was complicating the problem further in the domestic market and assured that every step will be taken to tame this spike.
"Tt is a big problem. We will have to come to the path of fiscal consolidation. We have to take all necessary measures to bring the inflation to a moderate level," Mukherjee said, adding a 3 percent growth gives a $41 billion-plus stimulus to the economy.
"High economic growth has its own reaction. It is resulting in a huge fiscal expansion and that is creating the problem of price rise," he said, and predicted a 9-10 percent annual growth soon on the back of prudent policy.
"Strong fundamentals, prudent policy and calibrated reforms have helped to bring the growth pre-crisis level."
Published 08 January 2011, 08:32 IST