Inflation is the Latest Weapon Against the Central Government
The inflationary pressures on the Indian Economy has come as a handy weapon in the hands of the chief Opposition Party, the Bharatiya Janata Party (BJP) to whip the Congress led UPA Government at the Centre. The Leftist Parties have also joined the chorus in condemning the economic policies of the Central Government which has resulted in inflation crossing the 7% mark and is not showing any signs of settling down.
Meanwhile, the Union Finance Minister, Mr.P.Chidambaram assured the members in the Parliament that he would take further tough measures to control inflation even if it meant sacrificing revenues. Outlining the chief causes, he pointed out that hoarding of food grains and essential commodities need to be put down by the State Government with a stern hand by conducting raids on the hoarders and unearthing of the stocks. The States have enough teeth under the Essential Commodities Act to handle the hoarders but so far only five states have resorted to tough measures and other States need to take similar action. The Public Distribution System is also geared up with increases in supplies. The other chief causes were the surging prices of steel and cement. Accusing the manufactures of these items of forming cartels and exploiting the demand supply gap, he opined only supply management in this situation would yield results. There has been a significant gap between the supply and demand because of the high growth in the economy during the last four years. While long term production plan would have to be chalked out, the short-term fiscal Measures would be by importing these items to ease the supply constraints. Cut in the import duties and may be temporary tax holidays in terms of VAT etc would ensure certain amount of relief to the users. The monetary measures that needed to be taken are the handling of interest rate structure which would curb the excess liquidity in the economy and at the same time providing credit to food and agricultural sectors which would encourage production and supplies. All the eyes are now set on the Reserve Bank of India which is expected to announce the credit policy by the end of this month.
However, the Opposition Parties seem to be not satisfied with these answers as they accused the Government of passing the bucks and the Opposition Leader, Mr.L.K. Advani, went to the extent of asking the Government either rein in the prices or quit.
Tags: Inflation , Politics Of Price Rise
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