Don't cry over the double digit inflation eating into your purchasing power. It is other way round. Your purchasing power has shot up and so you are consuming more, causing the demand-supply mismatch and resultant inflation, finance minister Pranab Mukherjee affirmed in the Lok Sabha on Tuesday.

He cited the 12th Plan approach paper to claim the average real wage rate jumped by 16 per cent between 2007 and 2010, the growth was the fastest in Andhra Pradesh at 42 per cent, followed by 33 per cent in Odisha and even in states like Bihar and Uttar Pradesh the real farm wage went up by 19 and 20 per cent respectively over this period.

"This has increased demand for certain goods and services, which has translated into persistent high inflationary pressure for those goods in the economy," he says in a suo moto 11-page statement tabled in the House since it was in pandemonium.

Always happens: He says that always happens during period of rapid growth and structural changes, as India is currently undergoing. "We have seen this happen in all emerging economies that have gone through such periods of policy changes and rapid growth, ranging from China, South Korea and Vietnam to Argentina and Brazil."

Noting the global developments impacting the Indian economy dependent on imports in critical areas like fuel oils, edible oils and other primary items, he lists two steps to handle the domestic demand-supply mismatch: Improve supply and moderate demand. The first cannot be achieved in the short term, except resorting to imports and banning exports.

"On the demand side, while in principle it is possible to compress and restrict it through tighter fiscal and monetary policy control, the risk is that if it is done rapidly, then growth may decline sharply creating unemployment," Mukherjee warned.

Look, no inflation: And, he goes on to point out that it is not an out-and-out inflation in the daily use items like wheat, sugar and pulses, though not disputing that rise in the prices of vegetables and fruits is a matter of concern. He quoted the retail rates to compare prices between January 2010 and October 2011 in Delhi, Mumbai, Patna and Hyderabad and claimed nearly the same picture can be seen for other centres in respect of these items.

Wheat prices remained the same Rs 15 a kilo in Delhi, Rs 21 a kilo in Mumbai and Rs 13 a kilo in Patna, while the sugar prices dropped from Rs 44.20 to Rs 33.30 a kilo in Delhi, from Rs 42.10 to Rs 32.60 a kilo in Mumbai, from Rs 38.30 to Rs 31.50 a kilo in Patna and from Rs 36 to Rs 31.20 a kilo in Hyderabad, while Arhar dal (pulse) prices too dropped from Rs 87.40 to Rs 73.40 a kilo in Delhi, Rs 76.80 to Rs 70.50 a kilo in Mumbai, Rs 66.30 to Rs 54.06 a kilo in Patna, and Rs 82 to Rs 63.50 a kilo in Hyderabad. The rice prices in the rice-eating Hyderabad, however, showed a slight jump from Rs 19 a kilo in January 2010 to Rs 20.80 a kilo in October 2011.

Claiming that "we are doing all that we can do" to address the inflation as the government is committed to bring it down to "more acceptable levels," he doles out a new hope of the inflation that fired up to 10.6 per cent early this month will be down to 6-7 per cent by the March end.

Adjournment sabotaged: The haste with which Mukherjee elaborated on the inflation, right on the opening day of the winter session, was to stop the Left-BJP unity in its track from censuring the government with an adjournment motion that is not allowed if an issue is already raised in the session through any other route.

Mukherjee snatched away that opportunity of censure from the Opposition's hand while doling out an offer for debate as he concluded saying, "I look forward to suggestions from the floor of the House that can help us in addressing this concern."

He spelled out the administrative and fiscal steps the government as also the Reserve Bank of India (RBI) have taken to curb what he described as a "headline inflation" over the past two years and specially after the Lok Sabha's unanimous resolution on August 4 for tackling it.

No middlman: Without naming the wholesale traders fuelling inflation to pocket profits, he talks of urgency to allow retailers directly buy from the farmers and the farmers bring their produces to retail outlets by urgently amending and enforcing the Agriculture Produce Marketing Act. "This would bring better remuneration to farmers, check wastage and allow competitive prices in retail markets," he said and stressed steps to allow unhindered flow of food and other perishable items from one region to another.

On the "policy stance of going forward," the Finance Minister talks of a "facilitative policy environment" and increased public investments, pointing out that "a durable solution in an economy with rising income level lies in improving agricultural productivity, strengthening food supply chains and augmenting capacities in the manufacturing sector to keep pace with the growth in demand.

"We at the Centre are addressing the policy lacunas and creating mechanisms to catalyse the required activities," while it falls on the state governments to work on agricultural extension, investment and marketing and take advantage of various central initiatives, Mukherjee added.