UPA price woes persist, but GDP has crawled up

First, the good news: The growth rate of the GDP has crawled up from 4.4 percent in the first quarter to 4.8 percent in the second one.

Now, the bad news: The government has admitted that there are no quick fixes for taming the rising food prices.

So, the political conclusion is inescapable. The UPA would have to battle criticism on the price issue when it faces the people during the next general elections 2014.

The marginal improvement in the GDP growth rate has given the policy-makers some hope that the debilitating economic slowdown may be over. As chairman of the prime minister's economic advisory council C Rangarajan said: ''The second quarter GDP growth is certainly better than the first quarter and 5 percent growth for FY14 now looks achievable."

However, this improvement does precious little to help the government achieve its goals of inclusive growth and poverty elimination -the two factors that win votes for the ruling party. The government's hopes for a better recovery are based on the fruits of a good monsoon, and its beneficial impact on the rural economy. But higher consumer prices are delaying any improvement in the middle-class urban India that has so far been a key driver of economic growth.

Coupled with this dismal scenario, is the union finance minister P Chidambaram's acceptance that there are "no quick fixes" for taming food prices and the

monetary policy has little impact on curbing the rate of price rise. "I have been advised that inflation has got entrenched and monetary policy does not have, or has very little impact on food prices and fuel prices," he said, in the capital. "Demand (for food and fuel) is being stoked by the fact that we have high fiscal deficit and that fiscal deficit was not contained for a fairly long period, I think over a period of two years," he added. The retail inflation, based on Consumer Price Index (CPI), swelled to 10.09 per cent in October, mainly on account of high food prices.