It is a dark cloud for the United Progressive Alliance (UPA) government in the election year as despite of several measures to rein the inflation; it is continuously surging to new height. The recent Wholesale Price Index (WPI) has reported that inflation has reached to a near-four-year high of 7.83 per cent for the week ended May 3 as against last year’s 5.76 percent for same week. It was 7.61% in the previous week.
This new figure is sufficient to frustrate the government as Finance Minister P Chidambaram said on May 16, “Inflation is the biggest challenge for us.” However, the rising inflation and the prices of the food products have been a global problem and rest of whole world especially Africa, South America and poor countries are facing the food crisis problem. The condition of India is little bit better as government of India claims.
Finance Minister Chidambaram pointed out towards rising prices of manufacturing items, power and fuel and lubricants behind this bursting inflation while expressed to follow a wait-and-watch strategy till new monsoon to come. The government assumes that new monsoon might bring some respite.
The government also believes that the steps to curb the inflation would take some time to show its effect as government has taken a range of steps from banning the import/export of food products and crucial commodities to taking administrative measures.
Chidambaram has also reiterated that if the steel makers and cement producers would not announce to rip the prices at adequate level to hold the inflation under control, government would not hesitate to take administrative measures.
Warning to them, Chidambaram said, “As I said, we are waiting for steel and cement prices’ reductions to come into force, but we always reserve the right to take administrative measures if they are not enough.” However, he got some relief from the declining trend in food inflation as he said, “it was silver lining amidst dark cloud.”
He was interacting to the reporters on Friday at the sidelines of the Business World-FICCI-SEDF corporate social responsibility award function in New Delhi.
Steel and cement are the two major industries that cumulatively affect the inflation ratio up to 12 percent of overall inflation as per WPI measured. That’s why FM is predicting that if steel and cement industries decline the prices, it would moderate the speed of rocketing inflation.
Another major cause as experts believe is the rupee depreciation that has reached the lowest level of last 13 month at 42.90 against a dollar. The skyrocketing price of crude oils is forcing oil companies to heavy purchasing the US currency.
The depreciation of nearby Rs.2.50 as against per dollar has interrupted the government’s effort in taming inflation.
The prices of crude oil is also reaching the new high gradually and may likely to touch the $150 per barrel soon, which is also being the major cause of global inflation.
This spiralling inflation has also affected the industrial growth that has dipped to 3% in March.
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