Alarming inflation

ONions or no onions, the writing is on the wall. A massive rise in food prices pushed India’s retail inflation in December to a 65-month high of 7.35 per cent from 5.54 per cent in November, while the wholesale price-based inflation shot up to 2.59 per cent from 0.58 per cent in the same period. These figures, along with the dismal GDP growth projections, are deflating the government’s tall claims of having contained inflation. The ruling party’s contention that India has been less affected than many other countries by the global economic slowdown has also found few takers. No relief of any sort is expected before February, according to the RBI’s bi-monthly Monetary Policy Statement, and even that depends on the efficacy of the measures being taken to augment the supply of vegetables and other food items through imports.

Inflation affects everybody to some extent, but it hits the poor the hardest. The steep rise in the prices of essential commodities makes it even tougher for the lower strata to make ends meet. In recent weeks, the powers that be have been so preoccupied with dousing the fire triggered by the CAA-NRC-NPR triad that they have lost sight of the basics and allowed things to deteriorate on the economic front.

With the Union Budget a couple of weeks away and the Delhi elections also around the corner, the government is under increasing pressure to arrest the slide. Though inflation is expected to eventually come down on its own and reach a figure within the RBI’s comfort zone, this is no time to wait and watch. Testing the common man’s patience for too long is a suicidal course, politically as well as economically. The government needs to adopt a proactive approach to bridge the demand-supply gap. It’s also imperative to crack down on hoarders who are out to make a quick buck by exploiting the precarious situation. Already, the spectre of stagflation — high inflation combined with high unemployment and stagnant demand — is looming large. The worst may not be over yet, unless an all-out course correction is done without fail.