Another effort of the Reserve Bank to control inflation has proved a damp squib. The move of the Reserve Bank to raise the interest rates did not take long to backfire, as the next day itself became a testimony to food inflation going past the 11 percent mark. Precisely increase in the rates of vegetables, milk and fruits was termed as the main protagonist behind hike in food inflation. Now it is clear that the policy to rein in inflation through the Reserve Bank has proved a futile exercise. Ironically, in the past twenty months, the Reserve Bank has raised the interest rates on thirteen different occasions, but failed to derive the desired result. Even though experts term the increase in demand of food commodities for accounting the inflation, no sincere efforts are being undertaken to increase food production and supply arrangements. Better late than never, the Reserve Bank has finally come face-to-face with stark reality that raising interest rates cannot control inflation, therefore it has decided not to follow the same policy in future. Besides, the continuous increase in interest rates adversely affected the growth rate. However, it is yet to be seen about the measures yet to be taken by the Union Government meeting out challenges of curbing the inflation rate. If an effort is made to increase the production of food commodities, problems are bound to rise. With no activity of government machinery in this regard, projects to boost agriculture production, stocking of foodgrains and irrigation have come to an abrupt halt.

The failure of the Centre to bring about the required financial reforms has even further aggravated the situation. In its second term, the UPA has neither strengthened the basic infrastructure nor displayed any alacrity to speed up the development projects. The nation has been engulfed in power crisis owing to the failure of the Centre to achieve the stipulated target for power generation. The recent power crisis serves a befitting example of the government’s failure. If the power generation is not as per the requirement, it will have a direct impact on agricultural and industrial production.
The rising inflation graph is not the sole example in isolation speaking volumes about the Union Government’s torpor. It appears loathsome in moving ahead for social welfare projects. Interestingly, when the UPA returned to power, Sonia Gandhi and Prime Minister Manmohan Singh had urged the Union Minister to work with more dedication and enthusiasm as it had registered an emphatic win in 2009. The internal politics within the Congress and the government ensured that the PM’s diligence and Sonia Gandhi’s vision were left in abeyance. Before the Centre could come out of the corruption charges, the different ministries locked horns within themselves making the situation even worse for the Union government to function. After hiding under the cover of alliance, the Centre slammed the bureaucrats for failure, hence the babudom too resorted to a path of inactiveness. If the bureaucrats who play vital role in functioning and coordination of the government turn inactive, it will not take long to bring down the administrative machinery to a grinding halt. Though politicians have been arrested in two separate scams of the Commonwealth Games and 2G spectrum yet they have summoned the bureaucrats to work only to the extent so that fingers are not raised at their performance. As an outcome, most of the important files are still stuck in every ministry. The tug-of-war between the politicians have further compounded to the miseries. Now it appears that neither the Prime Minister has been able to bring about coordination in his Cabinet nor Sonia Gandhi successful in ending the wrangling amongst the party stalwarts. Earlier, it was believed that Sonia Gandhi’s illness had marred the functioning of the Union Government, but even her comeback to active politics has failed to bring about any solution to the vicious problems of the government. In her absence, Rahul Gandhi took control of the party and it was thought that he would take some positive and concrete decision to stamp his authority. To the disappointment of many Congress members, Rahul maintained an arm’s length distance from the functioning of the Union Government. If Congress members are to be believed, Gandhi scion is only focusing on states where the party is in a weak position or has been out of power for many years. The assembly elections in some important states like Punjab, Uttar Pradesh and Uttarakhand at hand. Though Rahul Gandhi is concentrating on these states, it cannot be overlooked that he had failed to boost the party performance in Tamil Nadu and Bihar. When Gandhi’s involvement in these states before the assembly polls is certain, it appears unlikely that he will take any interest in the Centre’s functioning. It is no longer a hidden fact that Rahul Gandhi does not comment on issues like corruption and inflation which have left the Union Government in an awkward position.

Only the Centre cannot be held responsible for the growth of problems in the country at a rapid pace. The state governments too are responsible for the alarming situation in the country. The work on several key projects cannot be expedited because the state governments are unwilling to fathom their responsibilities. The state governments are carrying out projects only with the sole aim of winning the assembly polls. As a result, the dependency of states on the Centre has increased manifold and they avoid taking firm decisions. They will have to reflect an active approach towards increasing the food production. Controlling the food inflation will prove a herculean task if the states continue to create obstacles in the path of new fertilizer policy.

Even though, the Finance Ministry keeps coming with up claims to control inflation and rein in food inflation every now and then, any respite from the crisis does not seem in the offing at the near future. In order to save itself from more criticism the Centre comes up with policies to lure people like increasing the subsidy rates, it would further deepen the crisis on the financial front.  The Indian economy is already restless due to the global recession. The major soothing factor in the testing times is that the Prime Minister himself is expert in financial affairs and the Planning Commission has skilled economists. Despite these factors, the Union Government is required to make sincere efforts to improve its public image.


(An original copy of the article published in Hindi on October 30, 2011 translated by the English Editorial. The author is Group Editor of Dainik Jagran)