The rising trend of inflation cannot be a false concern for India, but it brings the same worry as the intensely high summer temperature. One is natural, while the other is man-made. The government is said to have been earning for welfare, while the public struggles to survive on the planet. Amid these two contradictory facts, the varied principles of economics look like a puzzle to the general people., even as the government continues to decipher the complexities of the tough financial positions and remain ineffective in controlling inflation altogether.
Lately, it has been reported that we had been undergoing a tricky financial situation similar to China’s cost-push inflation. We are certainly not China. The straightforward point is that a higher input price hikes the cost of goods and this factor spreads price rise ultimately. However, wages are not increasing in that proportion. There are salary hikes and this is because of the high rate of inflation. Concerns about inflation trigger a recent sell-off in shorter-maturity rupee bonds. This is a trend that may accelerate if prices continue to increase.
“The high rate of inflation in June 2021 is primarily due to low base effect and rise in prices of mineral oils viz. petrol, diesel (HSD), naphtha, ATF, furnace oil etc., and manufactured products like basic metal, food products, chemical products etc. as compared to the corresponding month of the previous year,” an official statement released recently said.
Given the inflationary conditions, the Congress Party can raise the issue of inflation in the upcoming Monsoon Session of Parliament (likely from July 19). P Chidambaram left no chance at chiding the Centre for ‘pretending’ that price rise is a ‘false concern’ as he said that inflation has broken the back of the people due to the high rate of unemployment and wage cuts. Increased import duties on several goods, despite a downward trend in the value of the rupee, stands to be unsavoury, he added.
According to Chidambaram, the Goods and Services Tax (GST) is “a regressive tax” with “irrational” rates. Moreover, the cesses levied nearly Rs 4.2 lakh crore annually are kept by the Central Government itself. On import duties, he did not stop criticising the government for increasing import duties on several goods. Referring to the NSO data, he again said the consumer price inflation has reached 6.26%, which is above the upper limit of the inflation target set by the Reserve Bank of India (RBI).