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Mainstream, Vol XLVIII, No 26, June 19, 2010

Congress in a Tight Spot


Sunday 20 June 2010, by SC

Inflation has once again touched the double-digit mark causing considerable concern in government circles (never mind the brave face put up by the Finance Ministry officials and the Finance Minister hinting at a tighter monetary policy regime and asserting that the Reserve Bank of India would take appropriate measures to tackle the problem). The Wholesale Price Index (WPI) figures for May have put inflation at 10.2 per cent over the year. It has been particularly high in case of certain essential products thereby leading to a 16.5 per cent hike in the prices of food articles while foodgrain prices have grown by nearly 10 per cent. What is more, fuel prices have risen by 13 per cent and those of manufactured goods by six to seven per cent.

Reflecting on the situation on this front The Asian Age has quite perceptively observed:

…the government has proved totally bankrupt when it comes to laying down a protective net for the economically weaker sections. It has totally abandoned the public distribution system (PDS) only because it cannot maintain it properly. This is unbecoming of a government which claims to act on behalf of the aam aadmi. It constantly reiterates its faith in the “inclusive growth” mantra, but does very little about it in practice, and even dismantles elements of what already exists—such as PDS. It is then left to the Reserve Bank to literally armtwist banks into making “inclusive growth” a reality. Government officials at the village and district levels—who should be at the forefront of the “inclusive growth” effort—are instead busy lining their pockets and illegally amassing wealth.

The government feels that the inflationary trend would be reversed by the onset of the monsoon in July. Earlier it was stated that food prices would moderate with the arrival of the rabi crop. If there has been any moderation thereafter, it is actually negligible. It needs to be pointed out that the sudden and steep rise in the support prices for pulses has again revealed that supply-side constraints result in inflation whenever growth picks up. What is amazing is that at a time when inflation reigns high, the government is thinking of deregulation of the pricing of such intermediates as petroleum products. One basic reason why inflation persists is that notwithstanding a good monsoon, the decision to give a greater role to private trade in the market has encouraged a new inflationary spiral which the government is unwilling to control. Beyond monetary policy adjustments it is here that genuine changes have to be brought about and that too without undue delay.

Meanwhile the principal constituent of the UPA Government at the Centre, the Congress, is in a soup with new revelations about the reasons behind the Union Carbide CEO at the time of the Bhopal gas disaster in December 1984, Warren Anderson, being allowed to go scot free after he arrived in the city and was arrested by the Madhya Pradesh administration. Besides the Union Carbide manage-ment insisting that the Government of India had promised safe passage to Anderson even before he landed in India, the then deputy chief of the US embassy in New Delhi, Gordon Streeb, has now in an interview explained in detail who were behind the decision to that effect. He claims it was the Ministry of External Affairs in the South Block with the then Foreign Secretary M.K. Rasgotra himself having given the assurance to Streeb. Obviously then the officials of the Rajiv Gandhi Government were directly involved in the exercise. So the Congress spokesperson’s consistent declaration that the then PM did not issue any instruction not to touch Anderson (or release him from custody if “wrongly detained”) has no validity whatsoever and even Pranab Mukherjee’s valiant effort to quote Arjun Singh, the then Madhya Pradesh CM, that Anderson was a liability for law and order and had to be thus taken out of Bhopal sounds totally unconvincing because then he could have been brought to New Delhi and placed in “safe custody” have and not flown out of India to the US. Against the backdrop of the mass outrage at the release of Anderson, the butcher of Bhopal, by the powers that be, the Congress leaders are tying themselves up in knots. For the truth is that the Congress Government at the Centre headed by Rajiv Gandhi then allowed itself to be arms-twisted by the US Administration which had not yet assumed the status of the ‘sole surviving superpower’.

On the handling of both inflation and the Bhopal tragedy the main ruling party at the Centre is in a tight spot as the mass discontent on the two issues continues to acquire serious proportions.

June 17 S.C.

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