Brij Bhardwaj
India has started its battle for bringing inflation under control as during the last few months there has been sharp increase in prices of essential commodities. One witnessed that when things were coming back to normal, after Covid had come under control, the Russian invasion of Ukraine started which pushed up prices of all items. Crude oil touched new heights and even items like wheat, edible oil, fruits and vegetables started shooting up. Reserve Bank of India also warned against rising inflation and took steps like raising the interest rate to control inflation. The rate is likely to be raised again in coming months.
The action by Reserve Bank obviously cannot control inflation on its own and the Government had to step in. As a first step it banned the export of wheat to check prices. Agreed there is great demand for wheat in the world market because of the war in Europe but the need for wheat of one billion plus population of India has to be given top priority, as such ban on export of wheat. The next step was reduction in excise duty on petroleum products which brought about relief for transport sector.
Along with it duties on steel and plastic was reduced. The Government also allowed import of unrefined soya been oil . The price of Palm oil used by Vanaspati industry is also expected to fall as Indonesia and Malaysia are expected to allow its export. Result of these steps is expected to show results in the coming few months and bring down inflation and provide necessary relief for poor and middle class .
It is obvious that the Government of India has taken notice of developments in Sri Lanka, where the economic hardship brought about by sharp rise in prices led to the state becoming bankrupt and unable to pay for essential items like food, petroleum and medicines. The result was widespread riots and agitation against the Government. India is nowhere near that situation as we have large reserve of foreign exchange, our exports are rising and flow of foreign investment is growing.
But the inflation and falling value of rupee against dollar making imports expensive were signs that action was needed to check inflation. The lead taken by Central Government by reducing duty on petroleum prices should also be followed by States by reducing VAT so that price of petroleum products remains under check. India cannot allow a situation to develop like Sri Lanka where petrol is selling at over Rs 400 plus a litre. Situation is no better in Pakistan, which is seeking doles from China and Saudi Arabia to overcome the economic crisis. Value of Pakistan currency has fallen sharply. At one time it was at par with Indian currency but now is valued at half of our currency.
India has also to take care of needs of Defence forces as threat from China remains and there are no signs that it is keen to settle the border issue and withdraw from the areas occupied by it. The cost of fighting two front war with China and Pakistan is heavy but there is no alternative. Indian forces during the last two years have eliminated many militants in Kashmir but situation is far from being normal.
Practically every day encounters are taking place in different parts of Kashmir, some even in Srinagar city where innocent bystanders, Kashmiri Pundit Government employees, policemen and poor labourers are being targetted. The result is that India will have to go on improving its defence capabilities and try to attain the goal of producing more weapons locally instead of depending on imports.
The situation is difficult but can be tackled. Let us not forget that India at one time had to depend on imports from U.S.A for wheat to feed our people and today we are one of the largest producers of wheat and world is looking to us to make up the shortages in the world market. Indian farmers have the capacity to produce enough not only for domestic needs but also for exports. There is ,however, a need to make agriculture into a paying proposition by giving farmers a fair price.
One can say that there is no danger of India facing a crisis like Sri Lanka or Pakistan but at the same time it also has to make sure that our economy continues to grow at reasonable rate to provide enough for all in terms of jobs and control inflation. The problems are not unique to India as it is affecting the world, but we have the means and the will to face it.
Follow our WhatsApp channel
