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Section-7

 Dealing with the Price Situation

The most disturbing trend during the UPA rule over last six years probably is the fluctuation in prices. Till recently, when the WPI growth became insignificant or negative, rise in prices had been the most critical issue around which the government was struggling on policy front. Despite several attempts to moderate inflation in WPI primarily through monetary interventions, the government failed to do so. Budgetary interventions for inflation control had been largely unexplored in India. Probably, the government does not believe in the fiscal measures like tax and subsidy to ensure price stability. The monetarist approach of the government has not only resulted in government failure in inflation control, it has left numerous poor and marginalized sections of population vulnerable to price rise in essential commodities. The current efforts of the government have been to make efforts to retain the faith of the business class in the low/negative growth phase of WPI, while the policy circles still undermine the fact that the common people still face high price situations in essential commodities like food. There is no doubt that WPI is only an insufficient indicator of price situation, still an analysis of various components of WPI indicate volatile price situation in many essential commodities. Table-35 provides a brief account of the WPI situation in selected articles of consumption that shows, although the WPI all commodities have been stagnant over the last six months, in terms of prices of foodgrains, vegetables, manufactured food and essential medicines, it has remained intimidating for the people. Unfortunately, budget 2009-10 does not take in account such a situation seriously.

Table-35

Movement in WPI all commodities and some select items of consumption.

Figure-11

Movement of Prices from January 2009 Onwards

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