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LATEST NEWS UPDATES | Will rising prices hit poll result? UPA govt panics -Rajeev Deshpande

Will rising prices hit poll result? UPA govt panics -Rajeev Deshpande

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published Published on Jul 25, 2013   modified Modified on Jul 25, 2013
-The Times of India


NEW DELHI: Rising apprehension that food inflation may finally begin to bite in electoral terms has seen the Manmohan Singh government press the panic button as retail prices of cereals, vegetables and pulses soar in comparison to last year.

Persistent high inflation, particularly in food, is gnawing the government ahead of assembly polls in four major states later this year and the 2014 Lok Sabha election, a concern aggravated by opinion surveys indicating voter anger in both rural and urban areas.

The perception that the UPA is politically vulnerable unlike in the 2009 Lok Sabha polls, when the rural job guarantee and a farm loan waiver was seen to blunt the Opposition's campaign has arrested the government's attention.

Cabinet secretary Ajit Seth will consult secretaries of key ministries later this week to review steps to control or at least moderate price rise in the wake of reduced import duties and a low central issue price for food grain supplied to states.

Although the Congress is yet to be mauled in an election over economic issues since 2004 - some feel dangers of inflation might be exaggerated - the government and the ruling party are not banking on precedence.

Unease in the ruling coalition has grown as the Opposition looks to fuse food inflation with corruption, policy drift and weak leadership on the economy. Read with sub-5% growth, a high current account deficit (CAD) and a tumbling rupee, food prices could give popular discontent a sharp focus.

Raising worry lines in the government is the relentless rise in food prices with official data showing all pulses have become costlier barring chana. The rise ranges from 15% to 38% over the past year despite a record output for pulses in 2012-13.

Deepening the concern is the relatively lower rise in cost of imported pulses at Indian ports as these ranges from 7% to 19%.

Familiar problems of lack of storage chains, limited means of government intervention and partially developed market mechanisms are haunting the government as it tries to tame food inflation.

The government has previously admitted that high minimum support prices are pushing up retail rates of cereals but found solace in keeping farmers, an influential voter group, in good humour. But a sullen rural mood can well deplete the good will.

The worry that food prices could prove a significant chink in the UPA-II record is heightened by wholesale price index inflation creeping up to 8.25% in May from 6.08% the previous month.

As the government looks to rollout expensive welfare programmes like food security, the inflationary pressures on the economy could escalate making general price rise a widely experienced malady forcing the Congress leadership to take note.

Congress has held meetings of the working committee exclusively devoted to deliberating on inflation and the assurances offered by finance minister P Chidambaram and commerce minister Anand Sharma at a meeting of party spokespersons may not be enough.

In the discussions, Chidambaram referred to delayed clearances of projects as a reason for slower growth. If inflation and job losses - or even shrinking employment - go hand in hand, there may be cause for the ruling coalition to be anxious.


The Times of India, 25 July, 2013, http://timesofindia.indiatimes.com/india/Will-rising-prices-hit-poll-result-UPA-govt-panics/articleshow/21321679.cms


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