Given
that, there are experts who consider our Wholesale Price Index
(WPI) itself is simply wrong, and they have a point. In their
view, WPI is meaningless, for it measures only the prices
of goods, while today services account for 55% of our GDP.
Secondly, it does not talk about prices at the consumer level,
and by the time the Consumer Price Index (CPI) is released,
the data becomes obsolete. And here again, they suspect CPI's
ability to truly represent the price situation at the lower
strata of the society, incidentally for whom inflation matters
the most. Hence, they strongly believe that inflation anywhere
above 5.5% is in itself a threatening phenomenon for those
in low-brackets of income.
As
if it is the right time, rupee too has started falling at
this very hour of rising inflation and depreciated by 6% since
April 15, making the fiscal measures—such as cutting
import duties on edible oils and maize, banning export of
pulses and non-basmati rice, withdrawal of export incentives
for steel and cement, and other questionable measures including
banning futures trading in certain agricultural commodities,
threatening to add steel to the list of its `essential commodities',
etc.—initiated by the government less effective in arresting
prices. Looking at the all round surge in prices, the emerging
global food crisis, the rising oil-prices and falling rupee,
one is more tempted to infer that prices will not come down
in the immediate future; and no wonder, if on the other hand,
inflation peaks to 8% soon. Cumulatively, all these emerging
have made the job of Reserve Bank of India (RBI) more daunting. |
