And every time it is made to look as if it is the first time and also as if the attack on it was along brand new directions.

In February last year, inflation climbed to 6.73 per cent and the Finance Minister and the Governor, Reserve Bank of India (RBI), expressed their wonted determination to tame it so that it did not affect the poor and vulnerable.

The contents of the prescription at that time too covered familiar terrain: Ban on export of skimmed milk powder and wheat; freer import of maize and marginal slashing of fuel prices from the Government side, and the usual jacking up of the Cash Reserve Ratio (CRR) seeking to mop up liquidity, on the RBI side.

The steps announced after a marathon three-hour long session of the Cabinet Committee on Prices on March 31 offer little that is radically different: No Customs duty on crude edible oils and maize; lowering of customs duty on refined edible oil, butter and ghee; ban on export of non-basmati rice (it is inexplicable why such an export was allowed at all in the first place); raising the minimum export price of basmati rice by a $100 to $1,200 per tonne.

Stating that he was ‘very, very concerned’ about the ‘unacceptably high’ inflation which has turned out to be ‘more than anticipated’, the RBI Governor, for his part, proclaimed himself to be ‘in full readiness’ to combat it, presumably by a hike in CRR and a tight interest regime.

The puzzling, if not perturbing, aspect of the whole matter is that the Finance Minister was confident of keeping inflation at around 5 per cent as recently as on March 18, while replying to the Budget debate in the Rajya Sabha.

The RBI Governor also, at the time of third quarter review of monetary policy on January 29, made it his priority to contain inflation close to 5 per cent and anchor inflation expectations in the range of 4-4.5 per cent in 2007-08.

What was it that upset the apple cart within such a short span of a few weeks since these hopes were expressed?

Both the Finance Minister and the RBI Governor have blamed it on the import of items like crude oil, metals and food, which also meant, according to the Finance Minister, that India was importing high inflation in view of the steep rise in their international prices. Whether there is more to it than what this explanation suggests is a question that deserves to be gone into.

The efficacy of the remedial measures lies in their enabling the Government to arrange for quick and continued availability at affordable prices of adequate quantities of items essential for an average household.

This calls for concerted efforts by the various Ministries so as to rush supplies to areas facing shortages, ensure maximum utilisation of channels of public distribution, and take prompt penal action against hoarding and profiteering.

In addition, the Government should take upon itself the procurement of market surplus in food grains, and withdraw the permission given to private agencies to buy them directly from the farmers. The assurance that there is enough in the buffer stock to take care of the people’s need will by itself act as a check on prices.

B. S. RAGHAVAN

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