Common man reeling under generational inflation, needs relief

| MAY 08, 2022, 11:50 PM IST

Goans were greeted with the weekend news that cooking gas prices are being hiked yet again this time taking it to nearly Rs 1,000 per cylinder, the highest it has ever been in what appears to be yet another hit on the common man who is already reeling under high inflation.

The decision to hike the rate of fuel is conveniently blamed on the rising international petroleum prices that are in turn being blamed on a global supply crunch on account of the Russian invasion of Ukraine.

Lost in the middle is the convenient excuse that the government has been doing very little if anything to control inflation and has left the Indian middle class and the poor to fend for themselves amid inflation that is the highest in three decades.

Take for example the Prime Minister’s recent remarks at an online conclave with chief ministers of various States where he asked the chief ministers of mainly non-BJP States who had not reduced state VAT in response to the Centre’s decision to cut excise duty. What the PM conveniently forgot to mention is that back in March 2020 when global oil prices fell to their lowest in several decades, it was the Central government and not the States that hiked central excise duty to ensure that consumers in the country do not benefit from the lower global oil prices. In this case, the Union government grabbed for itself a lion’s share of the taxes on fuel.

Instead of completely rolling back its excise hike, the Central government has only nominally reduced central excise duty and is instead asking the States to do the heavy lifting when it comes to reducing petrol prices.

Another example is the completely tone-deaf behaviour of the Central government when it comes to hiking the GST rates for various items in which the Central government is proposing to do away with the 5% GST slab and shifting the bulk of the items currently taxed at 5% into the 8% GST slab. While the Central government argues that this move will help augment the revenues of the State, it conveniently ignores that it will only increase the additional burden on the common citizen.

But the real question we need to be asking is what has the government done in the wake of high inflation. The answer to that is hard to guess and there is nothing credible to show that there are indeed efforts being made to alleviate the sufferings of the common man.

By almost every indicator we are staring at a double whammy of high inflation coupled with an upcoming recession -- something that even the 2008 crisis didn’t offer. Back then there was a recession but not so much inflation. Here inflation is likely to prompt people to cut back on purchases and accompanied by reduced spending power, households are very likely to carefully calibrate their spending leading to a shortfall in demand. As things stand, the situation could only get worse from here.

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