Will Inflation Deflate The UPA?

cong.jpgThe UPA government tried hard playing the good Samaritan, considering the impending elections. They delivered a dream budget which pandered to the needs of every Indian, encompassing every strata of the society. The farmers got a loan waiver, the tax slabs were raised, and senior citizens got a fair deal. This was the government’s ploy to make a special place in the hearts of millions of voters. UPA, the so-called do gooder for the “aam aadmi“, left no stones unturned to make the aam aadmi happy. They wanted the aam aadmi’s happiness to turn the upcoming elections in their favor A well conceived plan it seemed. It would have gone on smoothly if only the demon called inflation would have stayed away.

Everything is not always smooth sailing. The UPA government which was banking on the goodwill of the common man is now cowering from the aam aadmi’s wrath.

The fiend called inflation has turned every thing upside down. Infact, it seems determined to wreck havoc on UPA’s noble election winning strategy. In the last four months, inflation has skyrocketed from 3.3 per cent to a whopping 6.7 per cent, thereby increasing the cost of basic essential commodities. Food items have to bear the major brunt of inflation; fuel comes next. The inflation rate for food items alone has risen from 1.8 per cent in December to 5.6 per cent as on March 15, 2008. The cost of indispensable fuel like petroleum has seen an eightfold increase under the UPA regime. Hence, as can be seen, the cost of survival is escalating by the day. Not a very happy prospect for a nation where a large chunk of the population makes up the middle, lower middle and poor fragments of the economic structure. In fact, the present rate of inflation has crossed the RBI’s comfort level of 5 per cent.

It is not just the common man who is feeling the pinch of inflation. Our very own government is going wobbly in the knees when it considers the impact inflation will have on their chance of winning the elections, which are lurking round the bend. The BJP’s lashing out at the government and taunting them with remarks such as ‘inflation being UPA’s election year gift to the common man’,every now and then, makes it even harder for our ruling party. In fact, BJP’s jibes are giving our Finance Minister sleepless nights and are prompting him to call meetings as late as 2 a.m. in order to figure out some solution to this daunting problem. Economists cite that this is just the beginning; the worst is yet to come. The rising prices are proving to be difficult to be curbed. It seems it will still be some time before the escalating prices can be controlled. UPA’s worst nightmare is unfolding. The worst is yet to come.

The situation has certainly given the BJP an upper hand in turning the tide in its favour. After all, inflation has been a major deciding factor of the election outcome. BJP seems to be deriving sadistic pleasure from Congress’s displeasure.

The Manmohan Singh Government is trying hard to get back the reigns and stabilize this un-tamable inflation. Import duties on edible oils have been abolished, rice export (other than basmati rice) have been banned. The Government has cut import duties on hydrogenated vegetable oils and fats; import duties on ghee and butter were cut from 40 per cent to 30 per cent. It remains to be seen if these measures will have a timely impact and check the whirlwind our economy is caught in.

What is surprising is the fact that all this is happening when our very own Prime Minister is a highly acclaimed and competent economist. The curse of inflation might be the UPA’s undoing. After snatching away the power from the hands of BJP, they did start on a good note, but UPA has had to face many hardships ever since. Checking inflation seems to be the only way the government will be able to save its face. Or else inflation will end up deflating the UPA.

Apurva Joshi

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