When the economist PM fails…

VINOD VARSHNEY

Indian PM Manmohan Singh

Among major economies of the world India has clocked the highest price rise in recent years. This has stark implications to various sections of our people. It means 221 million odd households had to shell out Rs 5.8 lakh crores more to meet their needs during the last 3 years. In effect this is a covert tax mainly on the poor and the middle class. 

The above figure has not been trotted out by communists to justify their relentless war on capitalism. It is the outcome of a research done by the global rating and consultancy firm Crisil, which works for national and global companies that  top the  profit makers’ list with turnover running into billions. They are touted as shining examples of successful capitalism, not socialism.

The price rise has been steady during the last three years and, though  it showed  some decline for a few months, there is no sign of a relief any time  soon. While raising the prices of petroleum products much was made out by the spin doctors of the government that it  spent more than 20 percent of  revenue income  from all sources on oil, food, fertiliser and interest subsidies. But Crisil’s research notes that total  Central  subsidy is less  than what people  spend extra due to price rise.

The revelation may embitter, even enrage, the common man. But will it prick the conscience of our economist prime minister who seems worried more about the growth index than the common man’s plight?  He does not care if the high growth curve has been achieved by punishing the common man.  

Every year during the preceding days of  national budget presentation  it is  common  for  white collar employees  in various offices  to speculate and pray  for  some relief in personal income tax. If the finance minister grants even a tiny relief, it makes   banner headlines in newspapers. Whereas the indirect taxation through price rise on common man during the last three years have turned out to be 35 percent, higher than any rich person including Mukesh Ambani has to pay on his income as income tax.

According to the research cited above, if prices increase by just three percent, say from five to eight, the outgo from the common man’s pocket in a year comes to Rs 1.6 lakh crores. This is a huge burden – in fact, invisible, indirect taxation. Common people feel the squeeze, the poorer they are, the more they are crushed. Sadly, they can do little about it except to think about a change in the system.

My dream is the prime minister ensures that prices never rise higher than 5 percent per annum.

(The article was published in the July, 2011 issue of Lokayat)