Monday, December 10, 2012

Put it back upside down!

That’s what the UPA did with the inflation figure, and thus favoured political opportunism over economic sense, says GYANENDRA KASHYAP

Let’s face it. The BJP may continue to harp on the plight of the common man in the UPA regime, but the fact is that even they could not have done much about the global slowdown over the past year. GDP, FDI, FII, there are a slew of indicators on on the economic that the Congress could get embarassed by. And that is why, the current Congress manifesto has little to speak on economic reforms. The less they have to deal with those painful numbers, the better, right? But shamefully, the Government did not lose an opportunity to misuse one statistic to its advantage, which we would like to discuss, as an indicator of how political maneuvering managed to overhaul economic sense in a government, which was ironically led by a globally famed economist.

That statistic is inflation, which the government pegged at a historic low of 0.44% in the beginning of March this year. The low inflation rate, however, has not at all translated into low prices for items consumed by the common man. And here is the catch; declining headline inflation does not necessarily imply prices coming down. It only implies that the rate at which the prices of goods were growing has become slower. According to Harsh Pati Singhania, President, FICCI, “Inflation rate has been coming down over time and these latest numbers are not entirely unexpected. However, the fact that WPI has come down to 0.44% on a year-on-year (yoy) basis despite prices of food articles going up by 7.3% on a yoy basis shows that inflation in case of other products has declined significantly.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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