People continue to grapple with an economy battered by covid-19 pandemic. Even though things have improved to a large extent due to various factors and measures including those taken by the local government, inflation continues to be on a higher side than one wants it to be.
The price of cooking gas cylinders has reached to over Rs 900. Mustard oil prices are scaling to new highs. Petrol and diesel prices continue to surge due to rise in international prices for crude availability. Vegetables have become very expensive too. Chicken, fish and egg prices are on a higher side.
The Consumer Price Index (CPI), benchmark inflation measure in this part of the globe, in Jammu and Kashmir is above 7.0 per cent. It is above CPI of national average and Reserve Bank of India (RBI)’s upper tolerance limit of 6 per cent.
Most of the people in Jammu and Kashmir, as also across India, are employed in the unorganised sector and these parameters suggest that their earnings are not indexed to prices. The rising inflation puts a squeeze on purchasing power and demand. In other words, the higher prices of goods and commodities have not only affected consumers but also resulted in less business turnover in the markets for traders.
While crude prices have increased significantly over the last one year, domestic taxes, especially the ones imposed by the centre and local governments, are also to blame. Union excise duties and local tax contributed to a substantial amount per litre respectively. Diesel, the main fuel for freight carriage, continues to climb to newer record highs and is bound to feed into prices of almost everything being transported across distances — from fresh produce to intermediate and finished industrial goods.
Unless the government cuts taxes, petrol-diesel prices will not come down. Their cascading effects will proliferate further. The central government needs to act on inflation before it causes more distress and wear down demand further. Otherwise it will only result in a tailwind for inflation going forward.
While measures are mainly to be undertaken by the central government, the local administration needs to act in controlling factors that are associated with malpractices by some unscrupulous traders. The local administration needs to face challenges with a lot more authority than it is showing or lacking presently.
The government must act to quickly rein in the inflation, inflicting further distress on people and eroding the demand.