Tackling the kitchen war

The Opposition (a la Rip Van Winkle) woke up to launch yet another of its on-off campaigns against the Government this week -- pasting posters on city walls protesting the soaring Cost-of-Living.

With no pun intended, the Cost-of-Living issue has for years been the bread 'n butter (rice 'n curry) of Opposition politics. For a record 18 months, inflation has been at double-digits, and is now 21 per cent according to the Central Bank itself. And many feel that may be a conservative estimate, because the Bank is no longer independent of political control.

In India this week, Prime Minister Manmohan Singh said that inflation hurts the poor the most, and indicated that controlling prices was his Government's top priority. The Indian Premier can focus on this issue, because he doesn't have a separatist insurgency of the magnitude that faces Sri Lanka. Controlling that insurgency is the top priority of this country.

Yet, rising prices hurt -- and hurt the poor the most. A report in this newspaper a fortnight ago, referred to an increase of Rs. 720 per average household in just two months - December '07 to January '08, with most increases directly related to rising prices of basic food items.

There are reports of worse to come. Electricity will go up by as much as 40 per cent; private bus operators have been given the green light to jack up fares every six months; and fuel, gas, rice, vegetable prices are now slowly, but surely going beyond the reach of the poorest of the poor triggering malnourishment if not hunger.

India is reportedly the fastest growing major economy -- after China, and scrambling to reach first place. But even Manmohan Singh, an economist and architect of this growth since his days as Finance Minister, is mindful of the social impact such growth is creating. "There have been some impatient editorials about the sacrifice of growth at the altar of inflation," he told a conference in New Delhi on Friday. "I see things differently. Inflation is an iniquitous tax. It is essential that the poor are not adversely affected by high inflation."

Inflation in India is only 4 per cent. But with elections only a year away and the Premier's party facing some major reversals in state elections recently, he sees some correlation between the two. The UNP's 'kitchen war' posters were daubed with pro-Government posters showing a map of Sri Lanka and the 'war against terrorism' that is being waged -- and won. This itself graphically describes the two warring positions.

While the Opposition, or at least the UNP, is opposed to a military campaign against the LTTE, and harps on rising prices, the Government covers up the COL issue by depicting victories on the battlefield. Recently the Consumer Affairs Minister admitted he had all but given up trying to control prices, and to some extent there is some justification with global commodity prices -- wheat, oil, milk rising. His Cabinet colleagues have come to his aid saying that not even Sakra - the God of Gods - can do the job of controlling prices.

Reports that the Government is keeping interest rates low by forcing State agencies (EPF/ETF/State banks) to purchase Treasury bonds at low interest rates, and by increasingly going in for foreign commercial bank loans (now indirectly via State banks to ward off criticism) are disturbing.

The Government contends that consumer needs have got more sophisticated over the years. Whereas some years ago, kerosene was a major component of a poor household's expenditure, now it could be the cost of a mobile telephone. Officials say inflation will taper off by July, but give no substantial basis for this promise. The question is how should the Government conduct itself?

There is a costly war to be prosecuted; world prices of commodities are rising. The resultant inflation is hitting the poor very hard in the stomach. And the Government just cannot afford to continue subsiding or cushioning these rising prices. The foremost step would be to recognise the problem. Covering up posters is futile.

The Government must declare 'war' on corruption, waste (in an over-sized Government that is robbing what is due to the poor) and mismanagement. There is absolutely no indication of that. What we see is a Government trying to gloss over all these domestically created problems that are within its control. Prompting the termination of a management agreement with an internationally recognised airline (that had several pluses) with its own fledgling airline merely because some VVIPs were not given seats on a flight, shows a lack of judgment.

It may behove the Government to take a leaf from the economist-politician in the neighbourhood, when he says that tackling inflation and prices is a top priority for a Government.