Inflation has again shot into limelight.

Inflation has again shot into limelight. For the week ending March 29, 2008, the rate of inflation soared to a 10-month high of 7.81 per cent. Of course, inflation is neither a new phenomenon nor confined to India. Historically, galloping inflation and steep rise in prices have brought havoc and untold sufferings to the people at different times in various countries, besides causing the downfall of many governments. Taking into account the long–term trend in the movement of prices in India, it can’t be held that the current wave of inflation is unprecedented, for there were earlier periods in which the county had to confront with much higher rates of inflationary spiraling of prices. But, at present, inflation has caused widespread distress and evoked unanticipated attention. While the public outcry against price rise is widespread, the opposition parties have seized the opportunity to embarrass the government and the ruling combine by organizing agitations, road/rail blockade and even courting arrested. Moreover, the media, both the print and the electronic media, have shown unusual interest in highlighting inflationary spiraling of prices. As a result, today everyone has inflation on their lips! The views on the causes of current inflationary pressure in India are diverse and conflicting. While the economists, planners and others try to explain the plausible causes of inflationary pressure in terms of theoretical formulations, the politicians have made the issue theatrical. According to BJP, the current inflationary trend “is not a natural calamity, but a man made crisis by the UPA.” The Left parties view that inflationary spiraling of prices is due to neo-liberal economic policies of the government; they cite, among others, futures trading in essential commodities, foreign direct investment in the commodities market, weakening of the Public Distribution System, lack of steps to strengthen the essential commodities law and failure to roll back the oil price hike. The government blames the global rise in prices as the villain. According to Mr. P. Chidambaram, Finance Minister of India, the general price rise witnessed in the country recently is largely due to costly imports of essential commodities. That is, the rising global commodity prices, both food and non-food, has pushed up prices in the country. Among others, two features draw attention to the impact of the current inflation. One, although the country has witnessed a steady rise in the growth of output and income, almost the entire addition to national output has gone to a small section of the population, which is keen to attain the standard of living of the affluent sections of the population in the rich countries in Europe, America and elsewhere. That is, the vast multitudes of people have scarcely seen any discernible rise in real income so that they can sustain the impact of rise in prices at least to a certain extent. Thus, in addition to the usual fiscal and monetary measures, many shot term as well as long term measures will have to be undertaken in order to prevent inflation becoming an irritant to the people and a blot to the government. The short term measures, among others, are: 1) strengthening the Public Distribution System (PDS) and steps to bring additional items and more people under the PDS; 2) ending speculative trading in food grains and other essential items; 3) stringent action against hoarding of essential commodities: 4) preventing the entry of corporate and multinational traders into retail trading; 5) ban on forward and futures trading in essential commodities; 6) discouraging foreign direct investment in the commodities market: 7) curbs on procurement of food grains from farmers by private companies and traders, and stopping direct procurement by corporate and multinational corporations

Dr.C.Murukadas, The Times of India, Oct., 2012