Wednesday, July 9, 2008

INFLATION; INDIAN JUGGLERY

Inflation is word what perhaps a primary school boy is getting use to. So much the pressure of inflation affected all strata of society in India or greater part of the globe. In India as with everything else, even inflation is not without its doze of hypocrisy! It is one of the few countries where a democratic Government juggles with the figure. Most of the developed and developing countries use Consumer Price Index (CPI) to calculate inflation, but for India it is Whole Sale Price Index (WPI). Government`s plea is that they cannot collect the data always on which the CPI is based! Ridiculous! WPI includes 100 out of 435 commodities, what are not important from consumer point view. In fact the retail price what consumer pays is much higher than the wholes sale price. In recent months there has been more than 30% hike in several commodities what are for common consumptions. In some cases it is even 60%! Whereas the latest Government figure declared 11.63% rate of inflation. Imagine the difference and it is not difficult to understand who are enjoying the margin. The traders and hordes of middlemen are enjoying the blessing of inflation. The farmers and the consumers both are at the receiving end.
Well, that is the jugglery on the Government`s part in India. To appease the public tall claims are made that is much lesser than many other countries in Asia like China, Sri Lanka, Vietnam or even Iran. None cares to confirm whether the figures of CPI or WPI being quoted of those countries. However, though the villain is identified as crude price hike but is it only the spiraling crude price to be blamed for? The price of food grains have also gone up to astronomical extent. Let us see the reasons. First of all food crises engulfed the whole of the world now. America or developed nations in Europe are not spared; keep afar the poorest African or Asian countries. The US diverted 20 per cent of its maize production to the production of ethanol; Brazil diverted half of its sugarcane production to make bio fuel. The European Union used the greater part of its vegetable oil besides what imported for production of bio fuel. This also deprived the land what usually produce the food grains; thus resulting in food shortage there.
India even after having banned the major food grains export fails to control its price. In fact India is never a major food grain importer but it is the 2nd largest exporter of rice. It imports 70 per cent of its gross fuel consumption and currently in a feat to control petroleum price has already subsidized INR 700,000 millions. This followed a petroleum price hike to fuel inflation further recently.
What fuels the Indian inflation? First of all, the parallel economy that co-exists with visible official economy. It is supposed INR 1200000 millions could not be collected as tax and INR 1500000 millions unpaid loans are floating in the market. They are joyfully participating in speculation. Besides stock exchanges other options available commodity futures; the ocean of black money is yielding pools of white money while jacking up the commodity prices to the level of sky. The poor and penniless are on the verge of devastation due to the surge in the ocean of black money. They match only the tsunami victims.

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