Does govt have a prices formula?

Prime Minister Manmohan Singh’s seventh consecutive Independence Day speech on Sunday may have left many with the sense of unmet anticipation. It appeared to be short as communications with the country on such an occasion go. There was also evident in it a lack of fullness, and indeed of buoyancy. The last need not have been the case. When the gloom of global recession was spreading around the world, India held up well, and continues to do so on production and trade indices, even if agriculture remains below par and in need of technological, financial and institutional infusions.
It would appear that the internal security situation, on account of the Maoist question and Kashmir, has got the government down. But possibly the biggest dampener has been the price index. Dr Singh, the economist, was reduced to offering justifications and explanations (if oil subsidies weren’t cut — although this raised the price of petrol — the government would be left with too little for welfare schemes for the poor) as at a college seminar. In any case, these have been gone over times without number from government functionaries at different levels. The truth is that runaway prices need to be checked with alacrity. The people wanted to hear from the highest authority in the country a formula to do this, coupled with the resolve to make it stick. But they received none. This leaves the impression that the government is now reduced to offering a prayer that all things right come together in the macroeconomic universe to bring down prices. Because the Lok Sabha and the Maharashtra Assembly election went off reasonably well for the Congress despite the price factor, there does seem to exist a degree of complacency in some quarters that this has ceased to be an election-time bogey; ergo, it doesn’t matter. The Prime Minister would do well to reject any complacency arising from such a premise. It can lead to dangerous waters. Instead, what Dr Singh needs to do is to think of the farmhand in distant fields and the hard-pressed daily wage earner in the cities. If these sections do not exert enough pressure on demand as prices are too high, then stagflation might well lie at the end of the barrel of the gun.
Of late, there has been criticism of the government’s handling of Pakistan and its seeming helplessness in doing something about Kashmir as the Valley lurches through weeks of violence and crisis. The criticism has been a touch harsh, and indeed not a little misplaced in the light of what the Prime Minister did say from the ramparts of the Red Fort on Independence Day. For a change, and considering that he has been the prime mover on India-Pakistan talks in the face of domestic reservations, Dr Singh was forthcoming on Pakistan in a forthright way. He said in effect that the process will not be able to go far unless Pakistan puts an end to the use of its territory for terror machinations against this country. The Prime Minister has done well to spell this out loud and clear. But his government needs to follow up with signals on the ground in order to be credible. This will also carry the right meaning for the situation in the Valley. His other important observation was the reiteration — after a lapse of time — that Kashmir is an integral part of India. This was clearly meant as much for Islamabad as for the separatists in Srinagar. When the Kashmir separatists and their patrons in Pakistan come to appreciate once again that this is not up for negotiation, their tactics are expected to be suitably modified. If this does not happen, the PM’s remarks suggest that the separatists will be squarely responsible for the current stalemate in the Valley.

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