Friday, June 20, 2008

On to more serious topics ... Inflation in India rises.

In keeping with my resolve to write a little more seriously, I am going to tell you about inflation rates in India in the present context.

As the readers know, global prices of fuel have hit the roof in recent times, and hence, the prices of petroleum and petroleum products, which were, until now "controlled" (with generous governmental subsidies) at low levels, were raised by the ruling central government about 14 days ago. The rise was about 10% for petrol (what Americans call gasoline), 8% for diesel and about 15% for cooking gas (LPG). This was met with protests by the opposition parties and also by non-governmental organisations. However, it must be said to the credit of Prime Minister Manmohan Singh (no doubt advised by Sonia Gandhi, nee Maino, widow of Rajiv and mother of Rahul and Priyanka), that his government has NOT backtracked on the price hike and the people are learning to live with it.

As a result of this price rise, coupled with the meltdown in the stock markets, the gradual appreciation of the dollar vis-a-vis the Indian Rupee, the sub-prime crisis and the economic and industrial slow-down, the inflation rate (as calculated by the WPI or the Wholesale Price Index) has climbed over the past 4-6 months from an acceptable 4-5 % to an unacceptable 11.05 % in the week ending on June 14.

... And the people are feeling the pinch. The prices of vegetables, fruit, meats, and virtually every other staple, consumable, and non-perishable essential and luxury goods have risen to hitherto unseen levels (I am talking with a time-frame of at least the last ten years!).


vin said...

Previously cars were used only by wealthy people in India. Hence a huge government tax was levied on petrol. It is this tax which should be reduced to bring down the price and the inflation.

Taher Kagalwala said...

You are right, of course ... but will that *alone* solve the problem? India is dependent to the extent of 70% on other countries for oil.

vin said...

It is the only immediate solution which will never be implemented for obvious reasons.

As for becoming self sufficient in oil it will take time and not solely due to obstruction by the present oil producers.

The alternative is to develop hybrid technology which is a huge challenge given the prevalent conditions ranging from lack of original thinking to deficient incentives.