Taming the prices of essential commodities has become a challenge for the government as retail inflation has shot up to 7.4 per cent. Sensing the gravity of the situation, Prime Minister Narendra Modi had to assure the people that his government would take necessary steps to curb inflation at the earliest. But the task is easier said than done as both the international and the domestic sectors are contributing generously in increasing the inflation. The ongoing war between Russia and Ukraine has severely impacted international trade and commerce. It began at a time when the world was limping back to normalcy after the pandemic virtually stopped economic activities across the world; when rebuilding the economy should have been the priority before encouraging any thoughts of adventurism that would give birth to numerous other problems. It’s a pity that ignoring appeals made by people across the world, Russian President Vladimir Putin invaded Ukraine, fearing that the neighbouring country was getting too close to countries allied with NATO. Well, all these problems could have been solved through dialogue between the two countries instead of opting for a full-fledged war. Putin’s act has disrupted the supply of oil and gas as well as fuelled inflation worldwide.
Along with this imported inflation (as stated by the prime minister), India is also faced with home-grown inflation which is evident from the rise in retail inflation that is mostly influenced by domestic productions of food and beverages. In July, this very segment contributed about 54 per cent of the retail inflation. According to the ministry of Statistics and Programme Implementation, the price of potatoes, onions and tomatoes have gone up by 17 per cent, 24 per cent and 360 per cent in recent times and took the food inflation significantly higher from 4.55 per cent in the preceding months to 11.51 per cent in the month of July. However, some experts have termed the unexpected price rise as a seasonal phenomenon and are hopeful that the prices will come down if the country enjoys a good monsoon and increase food grain production. But such a possibility appears to be bleak as monsoon rainfall has decreased considerably in the month of August, indicating a below par rainfall this season, which is not good news for the people who are struggling to make both ends meet. Such a situation is tailor-made for the government to intervene to keep the prices of cereals and vegetables under check by taking decisions like importing tomatoes from Nepal, etc. The government should bring the inflation rate down to below six per cent as per the guidelines of the Reserve Bank of India sooner than expected, or else high inflationary trend may have an adverse effect on the country’s growth rate, shattering the dream of emerging as the third largest economic power of the world within the next couple of years.
