Between inflation and N-deal

One of my Zimbabwean colleagues often lamented the hyperinflation in his country where people take currency in bundles and bring commodities in small packs. I was flabbergasted to hear when he said that one US dollar is equal to 25 million Zimbabwe dollars! The state Central Statistical Office of Zimbabwe admitted that inflation for December 2007 stood at a staggering 66,212.3 per cent!! And result was that there were persistent shortages of foreign exchange. Compare this precarious situation with that of Indian scenario. But then, the two countries are different.

Back home, the Prime Minister Dr Manmohan Singh must have lost much of his sleep over twin issues: unabated inflation that touched a 13-year high of 11.05 per cent and logjam at nuclear deal for which the time is running out. The hurry on the part of the government is due to the fact that the US has once again reminded India of time, which is slipping fast for the Indo-US nuclear deal. The Indian PM knows this that every delayed day is making the deal a lot more difficult to be implemented. The pressure is building up, so is the urge to seal the deal.

While the Left is as adamant as it has been a year now that the Indo-US deal is in the limelight, the Congress led UPA faces the most critical period of its rule, as the heat from both the people and Left are increasing everyday. If the government goes ahead with the nuclear deal, it loses the Left and hence, there are likely chances that it may lose the confidence in Parliament. In that case an early election is very much on the cards. Though the PM got a pat from Lalu Prasad Yadav, who endorsed the deal in the name of “national interest”, much remains to be done on the consensus frontier. But the other important ally, the Nationalist Congress Party (NCP) made it clear that it favours the Indo-US nuclear deal but it opposes to go ahead without the consent of the Left parties.

The Prime Minister, on the hand, seems very much determined to seal the Indo-US nuclear deal, he is not in a mood to sideline the Left and let the government fall, on the other. And as the news coming in, Sonia Gandhi too favours the PM on the issue, albeit her tacit consent is yet to be made public. There are rumours of PM going in for the deal even without the support of the Left and that he might seek support from Mulayam Singh Yadav. Now it remains to be seen whether the PM succumb to the political pressures, especially from the Left or go ahead with his long-cherished dream of making India free of nuclear isolation borne out of the Non-proliferation Treaty (NPT) as well as providing a solid base for fulfilling energy requirements or resign in the wake of its fallout.

Inflation, as economic catastrophe, has been in the centre stage for the last six months when oil prices began to soar and the news of shortage of food grains hit the headlines. But 11.05 percent is sending real shock waves across the country particularly to the poor. Though middle class too faces tough time in coping up with rising kitchen budget, the poor are worst hit by inflation because they have little or no savings, and the only way they can cope with soaring prices is to cut back on essential consumption.

Amidst the hectic activities in Delhi, for example, RBI Governor Y V Reddy meeting the Finance Minister, P Chidambaram to decide on steps to be taken to tame inflation, things are not likely to improve for the next few weeks, so far inflation is concerned. Experts and analysts believe that inflation could go up to 13 per cent in days to come. And that would be the last nail in the coffin of the already cornered-to-the-wall UPA government.

The opposition BJP is watching from the fence as to which way the wind goes though it has criticised the way the whole deal has been pursued by the UPA government. On inflation, it has pulled the government many a times. Coming days are very crucial for the Indian politics, but one thing is almost certain: Congress will find it extremely difficult to secure as much seats as it had brought to its kitty in the 2004 elections when it goes for polls in 2009. After all, masses may forget the politics of see-saw battle over nuclear deal they will not let the go with inflation continue to rise.