The Hindu Business Line : Inflation numbers

The article "Are inflation figures the least trusted official statistics?" (Business Line, February 8) was well-written article and rightly questions the government numbers on inflation. But it may be naive to expect an honest report on inflation, as it is loose monetary policies that create inflation in the first place.

A couple of additions would have made the article complete.

Most often, certain asset classes are ignored in inflation calculation, such as real-estate and financial assets.

After all, the Consumer Price Index is a manifestation of excess money supply; the government distinction of price inflation and asset inflation is artificial and not backed by economic logic.

Shanmuganathan N

e-mail

***

An interesting article. There is no doubt that we have to improve the quality of statistics. However, privatisation is not the panacea.

For instance, potatoes are sold for just 75 paise a kg at Salboni, a small town very well connected by road and rail, while the price in Kolkata, just 150 km away, is 10 times that. This despite the entire chain of trade from Salboni to Kolkata being managed privately. Also, one kg of chickoo is Rs 40 in Mumbai while the farmer gets only Rs 2.50 for it.

Statistics is a public good. But it is hardly so in reality. There is huge information asymmetry. The private sector thrives on this asymmetry that helps it make more money.

The solution perhaps lies in more careful public scrutiny of figures. Privatisation would only mean creation of multiple entities but not necessarily better accuracy.

R. B. Barman

e-mail

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in