Prices to spiral after elections 8212; Manmohan

NEW DELHI, AUG 17: Though the BJP is making much of the historic low inflation right now, prices are certain to rise once the elections a...

NEW DELHI, AUG 17: Though the BJP is making much of the historic low inflation right now, prices are certain to rise once the elections are over. According to the country8217;s former finance minister and architect of the economic reforms as we know them today, the low inflation we8217;re seeing right now is partly because of the low international commodity prices. But the consumer price index is still rising at 8 per cent 8212; the consumer price index for Delhi for the month of May, for instance, shows an increase of 15 per cent.

According to Singh, the government has also manipulated this by not increasing certain prices such as those of diesel 8212; if they had followed the principle of global price-parity for diesel as approved of by the Cabinet, they would have had to increase prices by around 30 per cent. This hike will now take place after the elections. Once this happens, Singh says, transport costs will go up and therefore the inflationary spiral will once again threaten us. Singh added that the money supply for the third year in a row is increasing at 18-19 per cent and the fiscal deficit is out of control 8212; in which case, the low inflation is only temporary.

Interestingly, though his party has vociferously opposed the government8217;s telecom package, Manmohan is not so vocal. He says the problem is the hush-hush manner in which things were done 8212; 8220;For 13 months they slept and when elections were announced they went ahead.8221; Add to this the fact that the original communications minister Jagmohan and finance minister Sinha were both opposed to the package, says Manmohan, and there8217;s clearly a problem.

Singh says that not just issues like the telecom deal, there are a host of other issues which will come up in the election campaign. Why, for instance, he asks, is Indian Airlines being forced to buy 50-seater aircraft that it doesn8217;t want?

The government, Singh says, has never been straightforward about anything. When they exploded the bomb they said it will have no economic consequences but within a few months they recognised that was all tall talk, then they ran helter skelter. When the BJP came to office they said they will curb multinationals on an anti-foreigner plank but under the pressure of the balance of payments and under the American pressure they went on this path of letting in multinationals 8212; even in low priority areas like cigarettes in a big way.

Ritu Sarin

Ritu Sarin is Executive Editor (News and Investigations) at The Indian Express group. Her areas of specialisation include internal security, money laundering and corruption. Sarin is one of India’s most renowned reporters and has a career in journalism of over four decades. She is a member of the International Consortium of Investigative Journalists (ICIJ) since 1999 and since early 2023, a member of its Board of Directors. She has also been a founder member of the ICIJ Network Committee (INC). She has, to begin with, alone, and later led teams which have worked on ICIJ’s Offshore Leaks, Swiss Leaks, the Pulitzer Prize winning Panama Papers, Paradise Papers, Implant Files, Fincen Files, Pandora Papers, the Uber Files and Deforestation Inc. She has conducted investigative journalism workshops and addressed investigative journalism conferences with a specialisation on collaborative journalism in several countries. ... Read More