Sunday, July 13, 2008

The stink of onions!

Doesn't UPA realise that retail margin profiting is the culprit?

The summer had been really bad for the ruling UPA. As if the differences with the Left parties (over the nuclear deal) were not enough, the mounting crude oil prices and inflation has kept the whole economy on boil. Though all these concerns are somewhere inter-linked with each other, UPA seems to be more worried about the nuclear deal, as is evident from various media sources.

At present India’s import dependence on crude oil hovers around 70 per cent and 75 per cent, making it vulnerable to energy shocks. Just from an economic standpoint (overlooking the other demerits) this nuclear deal would go a long way to reduce this overdependence on crude oil. But then all this sounds too futuristic and good economics, neither which is in sync with populist politics of our country. Also, the deal sounds imprudent at this given point in time when there is an unprecedented surge in inflation. In fact UPA’s dogged insistence upon signing this deal and determined overlooking inflation is also disquieting, more so when elections are round the corner. For they know that it is neither the nuclear deal, nor the global crude oil prices, but the inflation which is going to decide their fate in the coming elections. For even if we write off the bottom 20 per cent (who are always marginalized, anyway), the current price rise has also affected even the top 80%. This outcome should have preferably put the UPA on a fire fighting mode. But nothing like that has been visible till now, except for the customary blame game(s) and shifting the onus to the Reserve Bank of India.

It is not just that inflation has pushed prices of basic offerings and accordingly tightened the real income of ‘aam aadmi’ in general, but the effects of it have had a domino effect even on the capital markets, hitting upon investor’s confidence and business buoyancy. There has not been any economic let-up even for depositors for they are reaping no more than negative returns. Amidst these testing times, what is intriguing is the manner in which the UPA has (mis)managed the situation on economic front. A pro-active action from them would have definitely helped them in the coming elections. Yet, they decided to look otherwise. Forget everything else, even if they could have just managed to control the prices of basic consumption goods, they would have won this battle, as there are myriad reports which state that the price differential for the basic goods (between the wholesale and the retail points) in itself is very huge.

The proposition here, that I insist at my own peril, is that instead of putting energies into signing the nuclear deal, they should have put an extensive effort to bridge this gap by setting up makeshift outlets everywhere. In economic terms, this effort would have hardly cost anything but the visible relief efforts from the UPA would have gone a long way in winning the trust and confidence of the citizenry. Lest we forget, the UPA has suffered a string of electoral thrashes since assuming power and the ruling party’s high command should have seized this moment to turn round its extant electoral misfortunes. The forthcoming election, needless to say, would have been a mere cake walk for the UPA!


No comments:

Post a Comment