A panel of Indian government ministers met Monday to discuss steps to contain soaring inflation, following recent measures to curb food and commodities prices. The Cabinet Committee on Prices, chaired by Prime Minister Manmohan Singh, was convened after inflation hit a 14-month high in the middle of March.
An Indian farmer in Amritsar, India
Soaring prices of vegetables, essential commodities and fruits are increasing the heat for the common man. Even rates of milk and dairy products, pulses, cereals, foodgrain and edible oil have shown an upward trend in recent months, prompting the government to take immediate decisions like cutting down import duty on edible oil and rice to increase the domestic availability.
Inflation rate surged to a 13-month high of almost 7 per cent for the week that ended on March 15 mainly on account of costlier food items like vegetables and mustard oil and metal products.
Indian Trade Minister Kamal Nath said the government was looking to cut duties on food items to rein in rising prices: "With international prices rising we arte looking at cutting our duties on many products on the food front – on edible oils, on a whole range of products, in fact bring them down to zero if necessary.
Bad news for the government
The price increase is bad news for the Congress-led government, which largely owes its upset 2004 election win to support from India's poor masses who have been hardest hit by inflation. The Congress, whose setbacks in several recent state polls have been blamed on rising prices, must face voters in a general election again before May 2009, where inflation could be a key issue.
Communist party leader, Sitaram Yechury, whose party props up the government, says the government has not learnt from its past mistakes: "There is global pressure on price rise that we are fully conscious of. But what we are asking the government to do is not something that they cannot do. That is we are saying end the speculation in the trade of essential commodities and impose an immediate ban on futures trading into 25 essential commodities. And if they had done what we asked them to do almost a year ago this price rise would not have been of this dimension."
Even the Opposition Bharatiya Janata Party came down heavily on the government. Ravi Shankar Prasad is the party spokesperson: "Between the year 2002 - 2003 India had the highest buffer stock of food grain. The BJP would like to ask this question: How it is that in an economy of food surplus which NDA has left, has today become an economy of scarcity."
With so many in India still living on the margins of subsistence, the smallest of price blips especially for onions and lentils, the staple of every household, can bite. And as campaigning heats up for the federal elections in other states later this year, inflation will clearly be in the political spotlight.