The standard wholesale price index for March 2021, published a few days before, reveals 7.39 per cent higher than for March 2020. Such a massive rate of inflation has not been seen in India for over eight years. In October 2012, the country had observed 7.4 per cent inflation over the similar month of the prior year.
We are currently seeing an inflationary upsurge. And it has been developing up for some time: it was 2.51 per cent in January (over the prior January) and 4.17 per cent in February. The issue is, why do we possess this upsurge?
There is massive unemployment in the nation and correspondingly huge idle productive potential. There are also abundant foodgrain stocks with the government—the economy, in brief, the Union government’s administrative decisions because of a common shortage.
An inflationary soar in a demand-constrained system can appear only because of an expansion in charges, and this is what has occurred. The inflation in costs beyond the board is essential because of the Union government’s regulatory decisions, so the current upsurge in inflation can be named a centrally-administered phenomenon.
The centre undoubtedly wanted inflation of this specific order, but the event results from the Central government’s planned and conscious efforts. Calling the overall inflation centrally-administered inflation takes this existence.
The most significant determinant behind this inflation is the Central government’s choice to support petro-product prices. The Central government primarily maintained a policy of not reducing petro-product prices when the world oil prices reached low and passed on the increase in world oil prices when they started expanding. Therefore, this itself gives a higher drive to petro-product values.
But then it has spread even additional. It has begun raising petro-product costs even when world oil prices have come down and remained low.
Joe Biden is driving out relief packages for working people and purposing to tax the wealthy. Still, the Modi government squeezes working people because it lacks the guts to provoke globalized finance by taxing the well-off.