Inflation hitting middle class and the poor

The woes of the middle class and the poor, already reeling under the impact of the coronavirus pandemic, are expected to worsen in the days ahead with the soaring inflation. The latest figures released by the Centre show that the wholesale inflation, as measured by the wholesale price index (WPI), rose to 14.5 percent in March, the second-highest in a decade. Already the prices of essentials are soaring and making life miserable for the citizens. For the citizens of states like Arunachal Pradesh, which is dependent on other states, in particular neighbouring Assam, for vegetables and food products, the situation is going to be worse. The vegetable prices are skyrocketing and it is becoming tough for the poor to buy them.

The record inflation is already threatening to slow down the economic revival in the country. The World Bank has predicted that India’s GDP growth rate this year would be subdued to 8 percent from its earlier projection of 8.7 percent, while the International Monetary Fund in its World Economic Outlook report has pegged the growth rate at 8.2 percent instead of 9 percent it had projected earlier. The Reserve Bank of India too has scaled down the estimate from 7.8 percent in February to 7.2 percent now. More worrying is its inflation projection – an average of 5.7 percent in 2022-23, up from the 4.5 percent projected in February. Both estimates assume the average price of oil to be at $100 a barrel, an uncertain variable, because it is susceptible to external factors. The ongoing war in Ukraine and the spiralling commodity prices threaten to hamper the recovery process. It is imperative for the government to tame inflation and boost consumption by providing direct benefits to the vulnerable sections even while continuing to do the heavy lifting in terms of capital spending.