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Inflation conundrum

While North Block mandarins seek to conjure up policy levers in the upcoming Budget to spur India’s fragmented economic recovery along, the latest official data suggest industrial output is stuttering with a meagre 1.4% growth in November. More worryingly, inflation is re-emerging as a threat — retail prices surged to a five-month high of 5.6% in December from 4.9% in November. While urban India continued to record a higher incidence of price rise at over 5.8%, inflation faced by rural consumers was at 5.36% — the steepest pace since July 2021. A dozen States clocked higher inflation than the headline 5.6% level, with half of them recording well over India’s stated inflation tolerance threshold of 6%, led by Haryana and Tamil Nadu with an over 6.6% print. While the CPI cooled month on month by about 0.35%, this was offset by low base effects that pushed up inflation in food and beverages, and higher clothing and footwear prices. The deferral of a higher GST on textiles, and softening

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Bad start: on Australian Open build-up

In recent times, the season-opening Australian Open has been played against sobering backdrops. If in 2020 the unprecedented bushfires marred the build-up, in 2021 it was the turn of COVID-19 lockdown restrictions to suffocate players. Nothing however compares to the saga that unfolded for 10 long days leading into the 2022 edition, which began on Monday. World No.1 Novak Djokovic, a nine-time winner in Melbourne, had his visa cancelled and was jettisoned over his decision to remain unvaccinated. Australia’s high inoculation rates have been credited for keeping its death rate low despite an ongoing surge in cases. In such a setting, the presence of an unvaccinated star, who has also not displayed COVID-appropriate behaviour in the past, was a tough sell. With Roger Federer also absent, the main drawcard is now Rafael Nadal, the only former Australian Open men’s singles champion in the fray. The Spaniard is locked with Federer and Djokovic on 20 Majors and can take sole possession of

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The week that went by

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Editorial

Chance and change: on Punjab polls

Since the last Assembly election in 2017, Punjab politics has changed considerably, though the issues that throttled the State then continue to do so even now. Unemployment, endemic drug abuse, mafias that control the liquor and sand trade, farm debts, and depleting groundwater are among the haunting problems. In 2017, led by Captain Amarinder Singh, the Congress party came to power with a thumping majority, winning 77 of the 117 Assembly seats. The election saw a triangular fight with a new entrant, the Aam Aadmi Party (AAP), coming into the State’s political arena. The Congress promises then included punishing the main culprits behind the sacrilege of the Guru Granth Sahib and police firing incidents at Kotkapura and Behbal Kalan in 2015, and the cancellation of ‘faulty’ power purchase agreements, but it could make only limited progress on burning issues. Captain Amarinder was accused of going ‘soft’ on the Badal family that helmed the previous government and continues to control the

Editorial

Red lines: on China-Lithuania tensions

The European Union (EU) has found itself caught in a bind over the worsening tensions between Lithuania and China. Last week, top EU diplomats met to find a way to de-escalate tensions before a planned EU-China summit, expected in the coming weeks. After a two-day meet of Foreign Ministers in France, the EU’s Foreign Policy Chief, Josep Borrell, said the grouping expressed “solidarity” with Lithuania, which is a member of the EU and NATO. He, however, stopped short of announcing any concrete actions. The EU has watched nervously as one of its members faces the full weight of coercive Chinese diplomacy, even as the grouping keeps one eye on its substantial $828 billion annual trade with Beijing. The tensions began last year after Lithuania announced the setting up of a Taiwanese Representative Office. Such offices are hardly unusual across Europe, or in much of the world. The difference, however, was in the naming. The offices elsewhere are not called Taiwanese but are named, as in New

Editorial

Friend in need: On India-Sri Lanka ties

External Affairs Minister S. Jaishankar’s virtual meeting with Sri Lanka’s Finance Minister Basil Rajapaksa on Saturday, with an assurance that India will support Sri Lanka “in all possible ways for overcoming the economic and other challenges posed by COVID-19 pandemic”, was significant and timely. A crucial week lies ahead for the Sri Lankan economy, when President Gotabaya Rajapaksa must make a decision on whether to service debts to bonds with an instalment of $500 million due on January 18, or to default for the first time ever, given the island’s precarious finances. Mr. Gotabaya is expected to address Parliament this week on how he will deal with the economic crisis. This includes a credit crunch, a slump in GDP spurred by COVID-19 losses to tourism, exports and remittances, foreign reserves that dwindled from $7.5 bn in 2019 to $1.6 bn in November 2021, and pending debt repayments of more than $7 bn expected in 2022. The most immediate problems come from rising unrest. In the

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