THE RECENT hike in India’s petrol prices is expected to fuel rising inflation, adding to the crushing burden on households struggling with soaring costs of essential foodstuffs and politically endangering prime minister Manmohan Singh’s administration.
Mr Singh’s Congress Party-led federal coalition at the weekend increased petrol prices for the second time in four weeks to about 60 rupees (€1.02) per litre – triggering countrywide outrage.
“The government is indifferent to the continuing agony of the common man due to the high cost of living,” said spokesman for the opposition Bharatiya Janata party, Ravi Shankar Prasad, yesterday.
Instead of taking tangible steps to control the situation, the government only seems to be making it worse, he added. Mr Prasad was referring to the spiralling cost of essential commodities such as onions, lentils, wheat and rice which had in the recent past triggered social unrest and resulted in provincial and even federal governments being voted out of office.
To exacerbate matters, overall inflation raced to 8.43 per cent in December 2010, up from 7.48 per cent the previous month.
Concurrently, food inflation was hovering at around 17 per cent, with Mr Singh’s inability to control the runaway price of onions – essential to almost all Indian cooking – the cause of widespread public anger against him.
Just 1kg of onions, which had cost Rs 25, had risen to Rs 100 (€1.70) last month and was now retailing at around Rs 70 per kilo in Delhi and other north Indian cities, making front page and lead television news in the capital.
Vegetables had seen a 25 per cent cost increase over the past 12 months, while eggs, meat and fish had risen by nearly 20 per cent.
Industry analysts warned India’s next food crisis could be over milk, which had not only become 24 per cent dearer but was also likely to be in short supply. Domestic demand in India for milk has outstripped supply, while cattle feed has been running out, producer costs have risen and productivity is almost stagnant.
In response, Mr Singh’s government last week announced various measures to curb prices which experts dismissed as inadequate.
After highly publicised meetings, the government declared the only “lasting solution” to control prices was to raise agricultural production, but it was silent on concrete steps such as banning future trading of essential commodities, and proscribing all food exports.
The government said it would set up an inter-ministerial group to study prices and review overall inflation, but admitted it was difficult to control the “unacceptable cost” of fruit and vegetables.
A beleaguered Mr Singh hopes reshuffling his cabinet later this week may provide some relief. Facing the toughest period of his second term in office amid accelerating inflation and corruption scandals, Mr Singh also needs to fill several vacancies – some which arose due to ministerial resignations following allegations of graft.
Analysts said the proposed reshuffle could indicate the direction the government will follow: backing reformist ministers, or bowing to political expediency and industry pressures and continuing with largely the same team, peppered with a few new faces.