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Inflation genie may be bottled by election time

Inflation genie may be bottled by election time
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First Published: Thu, Sep 11 2008. 12 18 AM IST

Updated: Thu, Sep 11 2008. 12 18 AM IST
That man from Korukonda, Andhra Pradesh, D. Subbarao, has just told a bunch of journalists and pollsters, in very polite English, what he really thinks about their views on inflation guiding the national mood.
The new Reserve Bank of India (RBI) governor is a mild-mannered man, brought up to mind his manners as many Indians from small towns are, one who hopes he will let his work do the talking.
In other words, very much a person in the mould of Prime Minister Manmohan Singh who believes that narrow-minded party politics cannot be allowed to come in the way of national interest (economic reform in the 1990s, the Indo-US nuclear deal now).
That is why when journalists and pollsters, including at Mint, talk about inflation as if it’s a genie with a mind of its own, you just know in your bones that they haven’t read their Aladdin.
With one eye on the palpitating Sensex and the other on the weekly inflation index, these writers, in recent months, have mourned the unravelling of the national growth story. And in a quick trice, bridged the unbridgeable divide between cold statistics and political instinct.
Inflation will overrule politics, these writers have said since the Prime Minister told Congress party president Sonia Gandhi in June that he was willing to stake the government for the nuclear deal. They insisted that the price of onions was far more important than an agreement so few people understood.
Ever so politely, though, Subbarao on Tuesday, in Sainik School English sharpened by programmes in two Indian Institutes of Technology as well as Ohio University, told these writers that they must do their homework better before jumping to simplistic conclusions.
Here’s what Subbarao didn’t tell them: The monsoon and winter sessions of Parliament are being clubbed together, to be held in October-November, and under the existing rules, the same question cannot be asked in the same session twice. Meaning, the Opposition cannot move a no-confidence motion on the nuclear deal and hope to bring the government down.
Even if the Opposition presses other motions and defeats the government on the floor of the House, elections have to be held within six months of the last day Parliament is in session. Considering Singh is such a stickler for norms, and the 2004 elections were held in April-May, he is bound to request the Election Commission to hold elections as close as possible to the end of his government’s five-year term.
That is, let the worst of the winter get over in the north Indian states. Let the country get ready for harvest. Let as much time elapse between the time domestic measures were put into place to control inflation (when it hit double digits in June) and its impact. Let the international prices of oil (which hit a five-month low at $104 per barrel this week) and steel and a variety of other commodities stabilize.
If inflation is part of the circle of life, as the Prime Minister believes, it is bound to come down by the time elections are held next year.
As long ago as June, the economist-Prime Minister realized that if he needed to do something about his legacy, he would have to change the agenda. He knew that the US would move heaven and earth to get the nuclear deal through. His other major ally, the bourgeois press, had supported him on the economic reform in the 1990s, and it supported him now.
Now, all the signs are that Singh remains determined to leave his mark on the India-Pakistan process. So what if he couldn’t travel to Pakistan himself. When he meets Pakistan’s new President Asif Ali Zardari in New York on the sidelines of the UN General Assembly later this month, Singh is going to use his beloved economics to break through the political morass that has been such an inevitable part of the bilateral relationship.
Let us open each other up to trade and investment, the Prime Minister is likely to tell Zardari, including at the Line of Control in Kashmir. If the Kashmiris want to take their apples, pears and their tomatoes to markets in Muzaffarabad and Rawalpindi, why not let them? He will remind the Pakistani leader about the emblematic slogan of the recent Kashmiri pro-independence protests: “mandi, mandi, Rawalpindi!” (Let us go to the vegetable market in Rawalpindi!)
How will Zardari ever say no to a subject closest to every Pakistani’s heart?
But back to Subbarao and the inflation warriors. It is certainly no coincidence that Singh has a man like him right at the top of RBI, who understands both the agony and gain of economic reforms. Subbarao was finance secretary of Andhra Pradesh in the late 1990s—when C. Rangarajan, who has just been made a member of the Rajya Sabha, was the RBI governor—and energetically pushed economic reform.
Read Subbarao’s lips at his Tuesday press conference: Reforms should promote inclusive growth through efficient and easily accessible financial services.
As the new RBI governor walks the political talk in the run-up to elections, his boss, the Prime Minister, ticks off the last few items on his government’s checklist. Inflation, even if it’s still elbowing for position, has been overtaken by lots of other news.
Jyoti Malhotra is Mint’s diplomatic affairs editor and writes on the intersection of foreign policy, trade and politics every week.Comments are welcome at betweenthelines@livemint.com
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First Published: Thu, Sep 11 2008. 12 18 AM IST