Inflation: Can they do it any differently?

Inflation: Can they do it any differently? Wed, 12 Mar 2014

Inflation: Can they do it any differently?

The opposition parties have been trying to make political capital of inflation and rising prices of fuel and food. While talking is easy, let's understand why prices have gone up and what have we done to keep the prices down.

Here is the truth about rising prices of fuel.

The price of petrol is driven by the international crude prices. There is very little any government can do to bring down international crude prices. The price of crude was around US $ 36 per barrel in 2004 and this is around US $ 105-110 now.

When international crude prices go up, a government can only intervene by sharing the burden by bearing part of the costs. The Congress-led UPA has done just that. The fuel subsidy bill has grown from Rs 6,351 crore in 2003-04 to a massive Rs 96,880 crore in 2012-13.

In 2003-04, crude prices were US $ 36 per barrel, the price of petrol was Rs 35.71 per litre. Without subsidies, the price at the pump would have been around Rs 109 per litre and not Rs 73 per litre. Under the NDA's petroleum pricing plan, you would have had to pay 33% more.

They blame our policies for driving up food prices. But what are these policies? The Congress-led UPA believes the farmer deserves a fair price. Minimum Support Prices have been increased significantly.

For us, fair price to farmers leads to rural prosperity, which increases rural demand and strong rural demand leads to strong economic growth. Finance Minister P Chidambaram explains this clearly in this video.

The question is, what would the opposition do to bring down prices?

· Force the world to bring down crude oil prices?

· Increase fuel subsidies, increase fiscal deficit and risk the India growth story?

· Reduce the Minimum Support Price to farmers and be unfair to them?

· Force the poor not to have milk, eggs, vegetables and meat?

These options don't exist for us. Maybe the opposition will implement one of these. They can talk about inflation and price rise.

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