Just as India’s economic growth is linked to the global economy through trade and investment flows the prices of Indian goods and services particularly those that are tradable are tied to global prices.NDA clearly was more successful at controlling prices than the UPA in absolute terms . But how much of this can be blamed on poor economic management? That’s where the global comparison becomes relevant.The UPA sharply increased government spending in 2008-09, in the run up to the 2009 elections as well as to stave off the effects of the global crisis, but found it hard to reverse course and reduce the deficit subsequently for political reasons.Ironically, price increases in petrol, diesel, non-nitrogen fertilisers and electricity aimed at reducing the deficit have helped increase inflation directly, as well as indirectly by making it more expensive to grow agricultural produce.In India ‘price rise’ is a way of talking about the lack of purchasing power or insufficient income rather than what economists call ‘inflation.’
Posted on: Thu, 08 May 2014 07:35:01 +0000
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