The Politics of price rise in India

Owing to conservative policies, and the fear of god and the fear of common man has ensured that Inflation in India has never crossed what could be termed as obscene levels of say, what Russia saw post- Glasnost and Peristroika or as is reported of about Jimbabwe reeling under the annual inflation rate of 66000% with 500Mn dollar note capable of getting you two loaves of bread. There are various ways in which inflation is measured, which could be one reason, though my mind and heart refuses to believe it, for the lesser degree of governmental insensitivity to inflation. As against the more accurate consumer price index (CPI), government measures it against the WPI or wholesale price index. Wholesale price index is pegged against the index comprising of around 435 goods. Since this is based on wholesale prices, actual variation for the consumer in terms of retails prices is much higher. The highest inflation India has seen in last two centuries is 53.8% in the year 1943, which saw devastating famine. The extent and gravity of that famine can only be understood in patches as it can be today, as you and me going to our offices today in the middle of the bandh felt today, a mix of cynicism and indignation, deftly articulated by some CII chairman and other dignitaries, who faced traffic snarls on the way to golf game in the evening. In 1943, ninety to nintety five percent of Bangali families (to quote from an interview by Amartya Sen, for a want of any other reliable source) staved off the hunger quite decently while around three million people died(how much can we understand the plight of children in UP who eat mud). Inflation refers to the value of money going down, which essentially is the outcome of  too much money chasing too little good or services. . Impacts of such famines (including the one last year) is usually felt by small segment of population varying between five to ten percent (highest being the case in Irish famine of 1840). Although undoubtedly hailed as a great economist in the political circles, this is PM Manmohan Singh's third tryst with high inflation, earlier occasions being as Chief economic advisor to Mrs. Indira Gandhi in 1970s, looking at inflation numbers of 20% for two consecutive years, and then in mid 1990s. This is his third brush with disaster and his being economist does console me much.

Fuel prices in India (meaning Oil, Petrol, LPG and Kerosene) in India is regulated by government of India, implying that the government of India decides the prices at which these products are to be sold off in the Indian Market. This is what is called Administered Price Mechanism or the APM, for short. As the sale price is kept fixed in line with government directives oftentimes, driven by political compulsions, oil marketing companies report to make losses on its account, with higher cost of acquiring the fuel assets and lower cost of selling it. These losses are compensated by OIl bonds purchased by the government from its expense pool, thus adding to fiscal deficit, while maintaining ornamental profit for the oil companies. As we can see, this is not a sustainable model and now that the overall growth in indian economy has reached a sturdy state, a free float mechanism for price fixing may be introduced. Now, another point to be noted here is that a major component of the price of acquiring fuel asset is the excise tax imposed by the government, which it compensates with the bonds, creating deficits which are addressed by the excise charged in the beginning. As per an interview given by the IOCL, oil major in India, chairman, they lose INR 3.2 per liter of petrol. Dismantling of APM to cover this small deficit is not something which could bring the nation to edge. It is the orchestra which has spoilt the music, and further situation was aggravated by the complete disregard of the ruling UPA combine to the people of the country and their cumulative sensibilities. When we talk of relationship with Pak, government spokesmen speak very eloquently about the need for talks as a way to resolve all issue, yet it is the same government, whose prime representative, does not speak to people on such matters. The man at the helm of it, seems quite helpless in handling his team members, so driven by their self-interests which could almost be called crusadic, if it were not for the evil lurking within their actions be it, fabricated short-fall of food grains or sugar or the spectrum game. And worse they do it with such impunity that it is absolutely appalling. What congress does not realise is that being the leader of the UPA, where it leaps forward to take the claim of NREGA of RJD's Raghuvansh babu, the blame also rests squarely on its shoulder. And hoping that the anger, the discontent will fade away as the channels get busy in Dhoni's wedding details could be as wrong and  as disastrous, as was Mrs Gandhi's reading in 1977 during Emergency. I pray and hope that for the sake of country, I may be right this time.

Earlier, the soft-spoken prime minister of India had told the Supreme court to stay off the area of governance when advised to use the grains rotting in the ill-kept warehouses of the country by the government-owned Food Corporation of India, to feed people on the fringes still facing the threat of hunger death. So, the courts out of the respect for the mild-mannered PM and out of respect for its own institution stayed out of it, and we, the unsuspecting, and irrationally optimistic and gullible masses, whose interest all political parties, in and out of government claim to be protecting, went about our business, post that rare press conference when the PM did speak to the nation, assuming the nudge to be sufficient enough to goad the government into taking action against then Minister of C&IT, and take steps to ensure enough food security. The action on the said Minister came an year too late and the Minister for Food and Agriculture, went into slight slumber, deciding not to give investment tips to marketeers and traders in public for a while, after facing criticism on predicting sugar, pulse and milk scarcity, throwing the prices on a growth trajectory, with increased hoarding, till the TV stings showed on camera the truth behind man made scarcities as hidden cameras showed sugar flowing from the seams of the godowns. However, seemingly, the lucrative ICC job, with, without or in spite of Lalit Modi, could keep him busy no longer and we, the aam-aadmi, who contributes to the democracy in various manner from filling the gaps in colorful rallies and then posting the votes in the ballets for reasons as serious as the caste, religion and region of the politician (however, looking at Bihar election result, I risk being called naive, given the way all the said factors were negated in favor of development to vote Nitish Government back into power), suddenly reached his vegetable vendor to find that the humble Onion is slowly but sureley finding its way out of the middle class menus, right on the back-drop of President Obama's statement proclaiming India's arrival. So we had Onions, and then Tomatoes, fighting for its honor against onion by coming on prices with a vengeance. Having received flack from all quarters, which reached the UPA-II's critical mass warranting some action or some show of it, the PM called for a marathon meeting, which ended with no great measure except great statements which you can compile and add into next edition of Khushwant Singh's Joke book, like The Food prices are increasing because of healthy eating habits of Indian people, or that Price rise is a natural calamity like floods and droughts (even when they are purely due to mis-management of food economy), or the one gem from the enlightened congress general secretary and the prince for whom the throne is being kept warm, that this price rise is due to compulsions of coalition politics, is it compulsion of coalition or is compulsive desire to stay in power, how come your compulsion constitute my emergencies? In the middle of all this, I have only these questions, a grocery list and a vote, which is an bank fixed deposit which is not to mature anytime soon. And when that happens, well, public memory is too short, just pick a kalavati, or poor boy in street, hold him in your arms, get some pictures taken, pay people, offer color TV in return of vote and then some shrewd maneuvering post-election with media and PR people serving as conduits of trade, and you are done. Why mend something when only thing that is broken is common man's back.