NEW DELHI :Prime Minister Narendra Modi has made controlling inflation a priority since taking office last month, but prospects of weak monsoon rains and turmoil in Iraq have increased the risk of rising food and fuel prices.
With the Budget Session of Parliament beginning from July 7, the Centre has called for a meeting of all state food ministers on Friday (July 4) to discuss the crisis.
As part of its strategy, the government has asked all states to ensure proper supplies of essential commodities. The Union Food Secretary has also written to states to crackdown on hoarders. The BJP-led government has also undertaken an elaborate public perception management exercise to tackle adverse publicity. The party has decided to use its MPs and state units to reach out to the people and convey the government’s stand on rising prices.
Among the biggest challenges before the government is to explain the reasons behind rise of rail fare, petrol and diesel prices – the latest hike was announced today. As part of its strategy, the government is likely to blame the hikes on the decisions of the previous UPA regime.
The government had ordered a crackdown on hoarding on June 17 to control the rising food prices and imposed export restrictions on certain farm commodities. The Congress has hit out at the government for its failure to curb inflation – one of Prime Minister Modi’s key election planks. “Who stops them from taking action against hoarders and profiteers? I think they need to walk that talk and ensure that whatever they have promised the people of this country, they deliver on that,” senior Congress leader Manish Tewari said.
India’s wholesale price inflation hit a five-month high in May, underscoring challenges facing the new government after Prime Minister Narendra Modi warned at the weekend that he will administer “bitter medicine” to revive the ailing economy.Modi has made controlling inflation a priority since taking office last month, but prospects of weak summer monsoon rains and turmoil in Iraq have increased the risk of rising food and fuel prices.
In May, wholesale prices rose a faster-than-expected 6.01 percent as a 19 percent increase in potato prices during the month pushed up food inflation to 9.50 percent from 8.64 percent in April.The data dampened some of optimism generated last week by retail price report that showed consumer inflation fell to a three-month low of 8.28 percent in May
Finance Minister Arun Jaitley is expected to deliver the government’s first budget in the second week of July, though no date has been fixed.
Speaking to party workers last weekend, Modi prepared ground for tough measures, while blaming the previous government for the state of an economy that has suffered its longest slowdown since India began free market reforms in 1991.”A mother knows that if she doesn’t give her child bitter medicine today, that will probably cause long-term damage,” Modi said. “To improve the economic health of India, pull the country out of the current mess, shouldn’t we take some bitter decisions?”The comments were interpreted as a signal that the budget will seek to keep a lid on the fiscal deficit and avoid populist, but inflationary spending.
India’s wholesale price inflation hit a five-month high earlier this month; underscoring challenges facing the government, just weeks after it came to power. PM Modi has warned the public that “bitter medicine” was needed to put India’s economy back on track, without giving details.