The Communist Party of India (Marxist) on Thursday refuted the “specious explanations” on inflation given by Finance Minister Pranab Mukherjee saying his statement hid the government's failure to check price rise.
Reacting to his November 22 suo motu statement in Parliament, the CPI(M) Polit Bureau said: “It is nothing but an exercise in deception to conceal the utter failure of the UPA government in checking the relentless price rise.”
While referring to the global inflationary trends, the Minister suppressed the fact that among the G-20 countries, India had the highest rate of consumer price inflation.
Equally appalling was the government complacency on the sharp fall of the rupee vis-à-vis the dollar and other major currencies.
Market volatility
“The depreciation of the rupee is adding to inflationary pressures because India has to import oil and fertilizers.” Rather than protecting the interests of ordinary consumers by stabilising the rupee value, the government seemed to be catering to speculative interests who benefited from market volatility.
Pointing out that rupee depreciation was mainly due to Foreign Institutional Investors (FII) pulling out massive funds from the Indian capital market, the CPI (M) said it had been constantly warning the Centre against liberalisation of speculative capital flows but the government refused to put any curb.
Fuelling inflation
Rejecting the government claim that excessive demand was fuelling inflation, the party said it was on account of the hike in the prices of petrol and diesel, fertilizers and other agricultural inputs, power and transport charges, etc.
Cost-push inflation
Also cuts in subsidies resulted in cost-push inflation and were having a cascading impact on food prices. The government was refusing to use the Public Distribution System effectively to provide an alternative source of cheaper food for mass consumption.
The CPI(M) demanded that the Centre direct the Reserve Bank of India to intervene in the market to stabilise the rupee, and curb speculative FII flows.
Other demands were that the government check price rise and inflation by rolling back fuel price hikes and reducing indirect taxes on petro-products, control fertilizer prices by enhancing subsidy, universalise the PDS and prohibit futures trading in sugar, wheat and other essential commodities.
