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Inflation Angered India

Monday, August 29, 2011

Seas of humanity across the entire nation continue to vociferously protest against the government. Their cause; a fight against corruption. Their demand; introduction of legislation that will punish all corruption guilty individuals severely, no matter how high the office.

Never, in independent India has such a collective,  spontaneous and unprecedented form of unity been witnessed. And it has almost humbled the government
including the prime minister and even threatens the existence of the ruling coalition. The government is clearly cornered.

I am not under-mining the necessity of attacking corruption. The fight against it must go on… But did corruption really cook the government’s goose? I personally,
don’t think so. This kind of unprecedented support for an evil that is as old as mankind and has continued to gnaw at the roots of this nation’s well-being for decades was already being accepted as a part of life.

Perhaps, the root cause of the present resentment was  elsewhere…it was inflation, which was seriously eroding the people’s economic well-being and antagonising the public over the past fifteen months. And it is this simmering anger against the government that, in my opinion, has found an outlet for expression through the “Anna’ anticorruption wave.

And this mood could surely fuel continued resentment  of the present government. More so, because inflation continues unabated and is being improperly attended to… The government has been responding to it through the RBI and other fiscal tightening measures. Over the past fifteen months the method of controlling this economy destroying monster has been the same. Tighten liquidity.

And this was done hawkishly through 11 consistent rate hikes by the central bank. But that does not seem to be working.

What we got instead is a slowing down of industrial growth, an outflow of foreign investments, weakening corporate profitability as also a nervous stock market that is losing shine by the day. Yet, inflation plagues the nation and from the look of things the situation will continue to worsen…. Unless of course, this failed approach is completely re-hauled and other more prudent measures are included. Till then the nation will continue to remain on tenterhooks.

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