August 5, 2010

hiding behind growth figures to explain inflation, mr. finance minister?

Finance Minister of India, Mr. Pranab Mukherjee, yesterday said in parliament: "There is no question that the strong recovery, desirable as it is, has contributed to an acceleration of prices.” He explained it and it was convincing.

But Mr. Mukherjee, what you said is part of the story and it is so when we are talking about inflation as it is measured by statisticians and analysed by economists. Price rise is something that affects humans who use money to buy things. You and your colleagues and your spin masters have been blaming the present price rise on last year’s poor monsoon rains, rising consumption, international commodity prices and so on.

What you need to do [not explain], Mr. Minister, is to bring down the prices in the retail markets, especially of essential commodities. Check the price rise in wheat, rice, pulses and edible oils that are staple food for Indians. You can do so if you really try hard because you have huge huge stocks of food grains and a nearly unlimited purchasing power. Check rise in prices of milk and milk products. These are the best nutrition supplements for the common man, especially children. You need not artificially control the prices of petroleum fuels, but you can surely check corruption and inefficiency in petrol and diesel, kerosene and cooking gas management by public sector companies.

To say that Public Distribution System [PDS] is operated by the States is to shirk your responsibility of suitably incentivising, guiding and advising the States. If you can ensure an efficient and leak proof PDS in the country, the impact of ‘inflation due to rising growth’ will not hurt people too much.

Similarly, blaming the States for huge margins being charged by retailers and middlemen does not wash, dear Minister. In Delhi, you get vegetables and fruits in residential colonies at rates that are up to five times of the prices prevailing in the city’s wholesale markets.

So, dear Minister, be committed towards people’s welfare like Gandhi ji was. Don’t hide behind economic explanations for people’s misery.

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