Inflation and infrastructure

Recently our MPs had a friendly match in the Indian parliament. Their topic of concern was inflation. As expected, no result came out of the friendly match. The only thing they gained probably was in terms of vote bank. Even with the average annual incomes having doubled, the inflation has only worsened the quality of life for more than 70% of the population.

For a normal middle class family, with price rise, house wives generally shift over to coarser grains of rice and wheat, and  reduce the amount of milk in their children’s daily diet. These are areas that are under control for most Indian families. But what happens if the price of the services get escalated? That is the lateral dimension of inflation. What about the doctor’s fees, school fees and other essential service charges? The fee of most surgeries has doubled in the past five years. The worst thing of inflated price is that once increased, it never returns to the base value. How do you control the price rise of service functions? How do you reduce the prices that once have been raised?

One reason that Indian prices are rising is that infrastructure growth remains sluggish. Progress on roads, railways, and power projects – all of which could prevent food from perishing prematurely, and energy and commodities from being unnecessarily wasted – is essential to stabilizing prices. The government must ensure better supply chains and remove the controls such as one that don’t allow free movement of agriculture produce from one state to the other. Inflation above 3% is not acceptable for working classes. Hope we see it coming soon.

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One response to “Inflation and infrastructure

  1. Pingback: Savior or Hitler? | Sourav Roy

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