Editorial 2nd Quarter 2022

    EDITORIAL FIRE MAG

ZINE 

JULY, 2022

 

 

                                                                                                                                           

THOTA  HANUMAIAH   CHIEF  EDITOR

                                                      INFLATION

The Inflation has gripped the country very severely resulting in skyrocketing rise of prices of all essential commodities, thrusting a heavy burden on the people  making their life exceedingly difficult particularly for the rural and urban poor populace. The inflation is a cruel attack on the people.

The retail inflation rate stood at 7.8 per cent for May, the highest in the past eight years. The food price inflation surged to 8.38 per cent, the highest in the past seventeen months and the wholesale price index inflation in April rose to  15.08 per cent, the highest level in the current 2011-12 series.

These statistics in real terms translates into increased prices of food items  which  means less to eat for the poor and lower middle class families, deprivation of nutritious food for children and the inability to buy any of the goods necessary, at least, for a minimum standard of living, as their purchasing capacity erodes with inflation. In other words inflation means loss of livelihood for lakhs of people.

 For the spiral of inflation, the biggest factor is the rise in fuel prices. The central government’s policy of steady increase in central taxes on petrol, diesel and liquefied gas has led to an unprecedented increases in the price of petrol, diesel and cooking gas. This began much before the Ukraine war and the war has only aggravated the situation. The rise in prices of petrol and diesel, have had their cascading effect on prices of all commodities.

It must be underlined that, the cesses and surcharges constitute 96 per cent of the central excise duties of petrol and 94 per cent of diesel. The cruelest hike is that of cooking gas cylinders with the price of a domestic 14.2 kg cylinder having increased by Rs 431.50 in one year i.e., 76 per cent increase. The commercial 19 kg cylinder price is now Rs 2,397 i.e., up by 126 per cent.

The NDA government has shown  shockingly callous attitude to this alarming picture of inflation. On the very day the figures of retail inflation for April were released, the finance ministry sought to portray as if the poor are hurt less by higher prices as compared to the rich. In the monthly economic review report for April, it is stated that “Evidence on consumption patterns further suggests that inflation in India has a lesser impact on low-income strata than on high-income groups”. The report comes to this conclusion by arguing that the headline retail inflation has varying impact on different segments of the population namely, the top 20 per cent, middle 60 per cent and bottom 20 per cent according to their consumption expenditure,which is an unfair conclusion.

The Inflation directly hits people who earn wage incomes and have low savings to fall back upon and particularly in regard to food inflation those who are net buyers of food. The rich and the upper middle classes can hedge against inflation through financial instruments and stock markets where prices move along with the inflation rate and hence they can protect their income to a large extent,against inflation.

Inflation generally leads to a transfer of income from the poor to the rich as the poor have no other mechanism to compensate their loss in real income which, the rich have.The Corporates, having control over the market, would transfer the burden of higher input costs to the consumers while maintaining their rate of profits. Further, due to inflation, real interest earnings of savers decline while borrowers have to pay lower effective interest rate. Since it is the working people who are largely savers and capitalists who are largely borrowers, here also working people suffer more.

 The working class both in the organized and unorganized sector along with democratic organizations have to fight against the price rise demanding for a roll back of all surcharges and cesses on petroleum products which is the only way to bring the prices of petrol and diesel under control. This is in addition to demanding  the strengthening of the public distribution system by supplying essential commodities to all besides increasing the purchasing capacity of people and also providing employment to the vast army of unemployed youth.

Further, demanding withdrawal of privatization of PSU’s, Railways, Ordnance Factories, Steel Factories,Banks, LIC etc,.

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