Half Measures Wouldn't Do by DR. MOHAMMAD MANZOOR ALAM (MAY 14, 2008)
Dr. Mohammad Manzoor Alam suggests greater firmness on the part of government to curb inflation.
Quite understandably, the Bharatiya Janata Party is gloating over the UPA government's failure to curb inflation. According to the latest data released on April 19, inflation grew by another 0.24 percent compared to the previous week, reaching 7.57 percent. That was the highest figure in the last 42 months.
As usual the government has been trying to explain everything away by merely describing it as an international phenomenon. That is true, but that is not the whole truth. There is still enough room for us to manoeuvre, straighten things out at our end and bring the inflationary pressure under control.
We do realise that the government has taken quite a few measures. By increasing the cash reserve ratio the government has pulled Rs. 2.75 trillion out of the banking system. Theoretically, now we have that much less money to splurge on luxuries and fuel inflation. Export of pulses and non-Basmati rice has been banned. That, at least theoretically, should make more food available for us and curb price rice. However, nothing of that sort has happened. Not so far.
Export of cement and steel has been stopped as their prices are a major part of the basket. Import duties on items necessary to keep the balance have been reduced and duties on other items have been increased, incurring a loss of Rs. 63 billion. The government has declared that it is importing more food than the shortfall in production, just to curb prices.
However, nothing seems to be working. The BJP is telling the people that the UPA has failed in controlling prices. Through such propaganda it wants to win the next elections. But the people are not fools. They know that the BJP-led NDA governments in the states have done precious little to control prices. In fact, they have done nothing.
Never expect the BJP to raid the godowns of the hoarders who are actually responsible for much of the trouble. Why should the BJP raid the godowns when it knows that those hoarders are its backers?
Now, a word to the UPA: You will never succeed in controlling prices until you force the hoarders to allow the grains to come into the market. Time is running out. You have to act quickly.