Address rising inequality
The greens, namely vegetables like tomatoes, have led the inflation spiral in August which could primarily be due to the late rains. This is a new development as it is usually pulses that led the rise but this time they fell as did eggs, sugar, meat, milk and cereals which is good news for the consumer. The flip side of food inflation is that the farmers stand to benefit only if the price increase goes into their pockets and not into those of traders. The government has done well to raid the onion traders in Maharashtra who were hoarding this item and creating an artificial shortage to jack up prices. The Goods and Services Tax also added to inflation in the core sector like transport and communications, as petrol and diesel saw a steep increase. The government has to take the onus for the latter as, though global prices of fuel have fallen the benefits have not been passed on to the Indian consumer. The government is trying to shore up its own balance sheet at the cost of the people. It’s a no-win situation for the consumer on this score.
Inflation, as former RBI governor Raghuram Rajan has always pointed out, hurts the poor most. This means that the bottom 10 per cent in the wealth ladder, constituting around 14 crore people are in the grip of hardship caused by inflation. They have no cushion of dearness allowance that the salaried classes have against inflation. The concern is that earlier there was jobless growth and now its growth without equality.
Prime Minister Narendra Modi had promised equal opportunity to all from the ramparts of the Red Fort, so it is hoped that he will look into this glaring inequality. He has for instance started the process of looking into the issue of why there is no job creation, so there is a possibility that he will look into the rising inequality.