Despite the marathon effort of government and Reserve Bank of India (RBI), Inflation is in no track to come down and only surging high gradually. The latest report of Wholesale Price Index (WPI) has reported that inflation has reached to 7-year high on 8.75 percent for the week ended on May 31 from the previous 8.24 percent.
The economists expect the number to climb further as the present data is yet to assess the impact of rising oil prices. With this the imminent circumstances presents a horror picture of inflation, which may go up to 10 percent.
As per WPI index, the price index for all commodities rose to 0.6 percent compared to last month, while the price hike in primary articles surge to 0.9 percent. The major hike held in primary articles including food. The index for food article went up by 0.6 percent on the back of eggs (4%), condiments & spices and urad (2% each) and barley, fruits & vegetables, mutton, milk and wheat (1% each) while the fish-marine declined by 2%.
On non-food items, index ascents by 1.9 percent in which hides (raw) (9%), linseed (6%), raw rubber (5%), raw cotton (4%), rape & mustard seed (3%), groundnut seed (2%) and copra (1%) went up more while leather (raw) (8%), raw silk (3%) and castor seed (1%) declined.
The Reserve Bank of India, prior to this report has already surged the repo rate, the rate on which banks borrow the debt from the Central bank, by 25 basis points to rein the inflation. Now, it seems that RBI and government will jointly have to take some tough steps to tame the soaring inflation.
“It may be possible that RBI may further hike the Cash Reserve Ratio and repo rate by 25 bsp to curb the ratio,” as expert believe.
On the other hand, the government that already has hiked the price of Petrol by Rs.5, diesel by Rs.3 and LPG by Rs. 50, can lead to further hike the price of fuels reviewing the international price of crude oil that is continuously spiralling. The oil pool deficit is pressurising the government to the further prices of fuels.
The Finance Minister P Chidambaram has reiterated “this rising inflation is a ‘worrying’ factor but will slow down soon.”
The opposition in its response has criticised the government’s inadequate efforts and being failure to rein the inflation.
“The government has failed to increase the supply of food and other commodities to the poor besides hiking petrol prices. Our calculations are that inflation could touch 12 per cent soon,” infuriated Yashwant Sinha, former Finance Minister and a senior BJP leader.
Besides opposition, the UPA government allies, the Left is also pulling the legs of the government alleging that the Centre didn’t considered the party’s suggestions which could have neutralised the oil price surge and guarded us against this inflationary spiral; it is a policy of failure.
“We have suggested a tax on fuel exports by the private refiners.” said Nilotpal Basu, the CPI (M) leader. Attacking on government’s public distribution system, Basu said, “An expansion of the public distribution system could have helped to protect the people by supplying essential food products at cheap rates and perhaps adding more products.”
The spiralling inflation has also affected the Indian bourses and both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) ended in the red. On Friday evening, NSE ended at 4517.10, 0.49 per cent down while BSE ended to 0.4 percent, below from Thursday index registering 15,189.62 point.
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