The Bharatiya Janata Party president, Mr Nitin Gadkari on Thursday apologised to the people of Delhi for the inconvenience caused to them due to traffic disruptions during the party’s rally against price rise a day ago.

There was no need for Mr Gadkari to do so as he was ventilating a popular grievance. His action only brings out a difference in the changing dynamics of the market. Prices no longer agitate the bourgeoning middle class as strongly as they did before. This is in sharp contrast to the agitations against price rise in the early seventies with the middle class forming the core.
This indifference is not going to help anyone. Even the Reserve Bank of India holds the view that unchecked price rise will spoil India’s long-term growth party as the virus spread to other parts of the economy from just food products a few months ago. Flow of the easy money has been at the root of the present financial crisis. The flow is not commensurate with the absorbing capacity of the market. In fact we should also recognise the fact that the impact of the fiscal stimulus is waning and it is imperative that the private investment and private consumption must pick up. But this is not happening in the right perspective. The RBI’s Macroeconomic and Monetary Developments report and the policy statement also highlight that inflation is a serious issue.
Let us hope that the RBI’s balancing act of raising the policy rates and CRR by 25 basis points each will tame inflation, support economic growth and help manage government’s borrowing programme. There is no denying the fact that the government has to redefine the growth parameters for finding a solution to the inflation. Instead of allowing the money to flow into the urban areas, attempts should be made to diversify it to the rural sector. The RBI’s move is primarily aimed at sucking out surplus liquidity from the financial system. Significantly, the RBI is relying on “normal” rains to bring down food prices and also the inflation rate. But going by the trend of the money flow, the scenario is not quite hopeful. Why should the government and the RBI be dependent on the rain god for giving relief to the economy? In case the monsoon fails then what will happen? The inflation will remain high and food inflation will linger longer. Certainly this is not in the interest of the country.
The inflation which has been raging for more than a year at about 17.5 per cent puts a question mark on the fiscal policies and their dimensions. The government, RBI and the policy makers have often blamed the rise in the food prices as the reason for inflation. But seldom has any serious attempt been made to look into the aspect of investment in the rural sector and also helping the farmers and peasants. Though the government has been promising to bring about reforms in the farming sector, still no significant effort has been made. On Monday, the Bharatiya Kisan Sangh (BKS) pointed out that input cost of agricultural production had gone too high owing to the sharp increase in the prices of seeds, fertilisers and pesticides; as a result farming has become almost a non-profitable activity. Hundreds of farmers had committed suicide across the country in the last few years owing to financial crises arising either due to crop failure or low income from farm produce. While the government should ensure that the prices of the agricultural commodities are raised proportionately to ensure that farmers get reasonable returns on their investment, it should immediately evolve mechanism to remove the middlemen. This will enable the consumers to get food items at reasonable prices, help contain inflation and give a boost to growth.