Congress offers voters cash to counter inflation

Congress offers voters cash to counter inflation
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First Published: Mon, Feb 05 2007. 12 00 AM IST
Updated: Sun, Feb 04 2007. 11 40 PM IST
NEW DELHI: Would you vote for a party that gives you Rs500 per month to compensate for your family’s rising food bill? That’s what the ruling Congress party is going to promise in Punjab, ahead of the 13 FebruaryAssembly elections.
“We were waiting for the release of our manifesto to make this announcement,” said Punjab finance minister Surinder Singla. “Prices have risen over the past three-four months, but so have incomes in Punjab. Yet, we are offering Rs500 per month to more than 10 lakh families each,” Singla added.
It turns out the party is on to something. Prices paid by agricultural workers in Punjab are the highest in the country.
At the end of December 2006, inflation, measured in consumer prices for agricultural and rural labourers inched up to 9% and is having a clear impact on the politics in the three major states electing a new assembly this month.
Most of the rise is concentrated in food articles, impacting farm labourers who are net buyers of foodgrains. Punjab, India’s granary, and Uttar Pradesh (UP), home to the highest number of poor, saw the highest inflation at 11.3% and 11.9%, respectively.
In UP, industrial workers too are facing an inflation of 8.3%. Consumer price inflation is still not calculated for Uttarakhand—even though it was carved out of UP in 2000—which too goes to polls on 21 February with Manipur. Manipuris have it easy, since prices in the state are 25% lower than those in Punjab or Uttar Pradesh.
Experts say the price rise is mainly due to a lower than forecast kharif output. In September, the agriculture ministry released a preliminary estimate for kharif foodgrain at 105 million tonne, 10 million tonne less than forecast. It hasn’t updated it since. Nor does the future hold out much hope.
According to Yes Bank chief economist Shubhada M. Rao, “There have also been disturbing reports on the weather affecting the rabi wheat crop outlook, which could keep up the pressure on prices.”
Opposition parties in Punjab, led by the Shiromani Akali Dal-Bharatiya Janata Party (BJP) combine, believe the voters will see through the Congress Party’s pre-election gimmick, since inflation has been raging for quite some time now.
Opposition parties argue the offer is an admission on the part of the government that price rise has become the most important issue in the polls, whether in Punjab or in Uttarakhand. Says former finance minister Yashwant Sinha, “The more the incumbent governments try to play it down, the harder they are likely to get hit in the polls.”
Sinha was part of the previous BJP-led National Democratic Alliance government, which fared badly at the 2004 elections after its ‘India Shining’ slogan failed to connect with the common man who was more concerned with the basic ‘bijli-sadak-paani’ issues.
The price issue comes even as the ruling United Progressive Alliance government has presided over several quarters of over 8% growth of the country’s gross domestic product, and a record 9% in 2005-06.
The Opposition is counting on the people to connect with the rise in prices and vote against the ruling party. S. Narayan, former revenue secretary and economic adviser to then prime minister Atal Bihari Vajpayee, said the government needed to apply brakes on growth in order to curb the runaway rise in prices.
“How can you talk about the aam aadmi (common man) and benefit only select sections like the industry?”Narayan asked.
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First Published: Mon, Feb 05 2007. 12 00 AM IST