The Halla Bol protest by the Congress on Friday (5 August) against increase in prices of essential commodities has nothing to do with reality. At the best, this was an attempt to demonstrate Congress’ anger at the various ED cases against members of the Nehru-Gandhi family and other members of the party for their acts of omissions and commissions when the party led United Progressive Alliance (UPA) was in power at the Centre. This was the Congress’ message to the Centre that if you investigate into various cases of corruption, be ready to face the music. The Congress thinks it has many aces up its sleeves to create troubles for the government. As the noose tightens on Congress leaders, the country is certain to witness more such protests on one pretext or the other. Price rise is only a ruse. And surprisingly the protests happened after a full-fledged debate in Parliament on the issue. The Congress had raised the issues in Parliament but did not have the courage to listen to the response. It walked out when the Union Finance Minister Nirmala Sitaraman was giving reply to the issues raised during the debate. The opposition was trying to create an impression that the situation of India’s economy was so bad that it would go the Sri Lanka way. Sitaraman asserted that the parameters were strong and there was no chance of India getting into recession or stagflation. Despite severe crisis such as the Covid-19 pandemic, Omicron and Ukraine conflicts, the country was able to manage to keep inflation to a level on 7%. She pointed out that during the UPA regime, inflation had touched double digit figure and for 22 consecutive months, the figure was pegged at 9%. To understand what this 7% inflation means, there is a need to understand this in the global context. Data released by governments across the world reveals that India ranks at 108 out of 172 countries which means that its situation is better than 107 countries in the world. Of these, 63 countries have inflation of more than 10%. The United States, Germany and many other developed economies have higher inflation than that of India. Food prices have risen globally due to supply side management triggered by the Ukraine crisis, climate change and the Covid pandemic. Prices have begun to stabilise, but this will take time. India has done well by taking care of the poor by giving them free ration. Close to 80 crore people have been provided this free food protection. The prices of vegetables, potatoes and onions have seasonable variables, but they are well within manageable limit. Not that the government is not recognising that there is pressure on food prices. At a meeting of the Niti Ayog on Sunday, Prime Minister Narendra Modi gave a call for stepping up domestic production by modernising agriculture, animal husbandry and food production. This would make India self-sufficient in farm sector and become a global leader, he said. Stress was given on diversification of crops to meet the domestic demand and reduce demand on imports. India imports edible oil from Malaysia and Indonesia and spends close to Rs one lakh crore just on this. The cost had gone up due to restrictions imposed by Indonesia on exports after the Ukraine crisis. The opposition needs to appreciate that when the entire world is suffering, you cannot single out India and predict gloom. Does it understand that there is global shortage of shipping containers leading to high bidding among traders to get their goods on the ships in an interconnected and interdependent world? Prices of electronic appliances that use micro-chips are likely to get costlier due to acute shortage of these chips. The factories manufacturing these micro-chips had shut down during Covid-19 Pandemic. Demand piled up and the manufacturers are finding it difficult to meet the backlog plus additional demands. Traders say that there is a waiting period of up to one year. In Taiwan, that produces about 63% of the chips, production suffered due to drought since chip-making demands huge water supply. According to an estimate, the chip crisis is going to be there till 2023. There has been a substantial increase from 10 to 30 per cent in the price of goods that use these chips including televisions, computers, kitchen appliances and cars. If the China-Taiwan confrontation intensifies, this would aggravate the crisis and the waiting for buying new cars could increase. Oil prices have increased due to low demand during Covid resulting in low income by oil producing countries and an increase in prices now to compensate for that. They are not increasing production to match the increase in demand. Global situation such as the Russian war on Ukraine has added fuel to fire. This will take time to stabilise. And we know that increase in oil prices have cascading influence on the economy since transportation becomes costly. Let us try to understand the oil situation for India. In 2014, when the Modi government came to power, the price of crude oil was 98.97 USD. It nose-dived to 43.67 USD in 2016, rose to 71.34 USD in 2018 and came to an all-time low of 41.96 USD in 2020. But it has touched a high of 106.92 USD in 2022. It has been predicted that the prices would increase up to 140 USD in months to come, thereby predicting hard times. This pressure had been faced even by the US that released a huge volume of oil from its reserves but the impact on its domestic market was only marginal. But amidst global economic pressure, India is an island of hope. Sitaraman pointed out that despite projection of a lower growth, India would still be counted among the fastest growing economies of the world. Just to make a comparison, she pointed out that: “4,000 banks in China are reportedly on the verge of going bankrupt. In India, the gross non-performing assets (NPAs) of scheduled commercial banks has hit a six-year low of 5.9% in FY 2022.” This certainly would not be music for the Congress that tries to show China in better light to belittle the Modi-government. Talking about the economic parameters, the Finance Minister pointed out that the GST collection since its inception was the second highest in July 2022 at Rs 1.49 lakh crore. She quoted economist Raghuram Rajan who said that the “the RBI has done a good job in increasing foreign exchange reserve of India, insulating India from problems being faced by neighbouring countries like Pakistan and Sri Lanka… New Delhi is less indebted which is a good sign”. India boasted of a robust foreign exchange reserves at $573.875 billion by the end of last month. While people may feel the pinch, there is no reason to be gloomy. After bad years, India is showing signs of faster recovery. Foreign investors are showing signs of confidence on our economy. At such a situation, those who predict gloom and slowdown are definitely not speaking the truth and are motivated by vested interests. Confidence is needed on the system and our strengths.
