Is inflation spinning out of control?

That is a question only time can decide. The indications are all there - tight supply, strong demand, hot money. The Government is trying its best to make it worse though. Take a look at this interview. Unlike this blogger I do not think the interviewer did a good job. Much as I dislike Kamal Nath, I think Indian reporters think they are too smart. There is a reason the reporter perhaps pulls in a few lakhs while how many factories Kamal Nath has no one really is quite sure of (ignoring the fact that many of them were blacklisted for creating pollution).

I think everyone understands basic economics by now. Demand goes up, price rises and vice versa. No point wasting airtime on these issues, they merely gave an exit route to the minister in question which he fully capitalized to sound like the Robin Hood he pretends to be. He won't even go down in posterity as a person particularly untruthful. Prices are rising, people are feeling pain, the minister is trying his best to give the common folks a break. Right?

Wrong.

There were only a few questions to ask Kamal Nath, not that it would matter. But if he attempted to answer them, he would in the very least create a public record, one that would have him down either as a liar or an imbecile, possibly both.

Q1. What gives a public office holder the right to accuse the cement industry (unilaterally) of profiteering? Prices of cement haven't risen significantly (compared to other goods like veggies) and these guys have ample excuses (like gasoline etc.). The price rise being talked about will happen in future, i.e. if the companies do not budge and decide to pass on the extra levies on to the consumer. This is slander. Did Kamal Nath speak with his legal counsel before mouthing off? Oh, I forget. India is not truly a democracy and verbal diarrhea like its rear-end version is quite common in our tropical country. Perhaps taken equally lightly too.

Q2. Kamal Nath believes that the cement industry is taking advantage of high demand and behaving like a monopolistic cartel. Well, by imposing levies in times like this, isn't the Government taking the full advantage of the monopoly it has over such things? What's sauce for the goose must be sauce for the gander, ain't it?

Q3. How exacly will levies plus price control reduce cement prices? The demand isnt going to go away. It will only ensure the cement producers build less capacity. With the retail boom coming on and the Government itself creating ponzy schemes to fund infastructure, who is gonna make all the cement? Or will we see Manmohanji doing a Gandhi and asking everyone to make their own cement? In the backyard perhaps?


Well, that was that. A minor side point, perhaps the reader has that annoying friend who lets out a fart on the sly every once in a while stinking up the room, right? Well, it is just like that with the ministers.

The Government today said its efforts to rein in surging prices have brought down inflation rate for essential commodities to 3.67 per cent as on February 24 against 6.77 per cent two months back.

Government has been taking necessary steps to contain inflation, Minister of State for Finance P K Bansal told Rajya Sabha in a written reply.

A simple verification of WPI from the Office of the Economic Advisor indicates inflation continues unabated. I verified the figure myself as illustrated in the above image. Now, your guess is as good as mine what these essential commodities are, fact remains our Government believes that people are naive enough to suck up such lies.