Political consensus needed to tackle price rise: Pranab Mukherjee

Discussion in 'Economy & Infrastructure' started by Parthy, Aug 4, 2011.

  1. Parthy

    Parthy Air Warrior Senior Member

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    Finance minister Pranab Mukherjee said on Thursday that there was a divergence of view among political parties over the issue of tackling rising prices. He hoped that Parliament would arrive at a consensus after the debate.

    The finance minister was replying to the debate over rising prices in the Lok Sabha.

    An opposition motion expressing concern over price rise was defeated in the Lok Sabha on Thursday, even as finance minister Pranab Mukherjee assured all steps to tame inflation but said there was no need to temper growth for that.

    Amid division following voice a vote, Speaker Meira Kumar declared the motion -- moved by Bharatiya Janata Party (( BJP)) leader and former finance minister Yashwant Sinha and Janata Dal-United leader -- as defeated by 320 votes to 51.

    "That despite repeated discussions on price rise in the house, the burden of price rise on the common man is continuing," Meira Kumar said, reading the motion, after it was put to a voice vote and defeated.

    "Expressing deep concern over price rise, this house calls upon the government to take immediate effective steps to check inflation that will give relief to the common man," the speaker added from the motion, while putting it for division.

    Earlier, replying to the debate on Thursday, Mukherjee sought to assure Parliament that Prime Minister Manmohan Singh's government was taking all possible steps to tackle price rise, but said there was no need to moderate growth in a bid to tame inflation.

    "There is no inherent contradiction between inflation and growth," Mukherjee said in reply to a debate in the Lok Sabha, the lower house of parliament, on an opposition motion that expressed deep concern over price rise.

    The finance minister said in the 1980s, India's gross domestic product (GDP) growth averaged slightly above 5 percent, and around 6 percent in the 1990s, which figures were relatively low compared with the growth of around 8-8.5 percent now.

    "Was inflation low at that time? No!" Mukherjee said, adding several steps were needed to tame inflation and that the house -- both the members of the treasury and opposition -- must collectively ensure these measures are allowed to be taken.

    - To read more Political consensus needed to tackle price rise: Pranab Mukherjee - The Times of India
     
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  3. Tshering22

    Tshering22 Sikkimese Saber Senior Member

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    This government is simply not interested in solving national issues anymore. Knowing jolly well that they will lose the coming elections, they are now busy amassing as much national wealth as possible so that they can scoot out whenever things get choppy. Though skeptics may refute what I am saying as over-exaggeration, this is eventually going to come out...
     
  4. Vyom

    Vyom Seeker Elite Member

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    Why did the BJP had to embarrass itself by bringing in this voting on price rise, knowing fully well that they do not have the numbers.
     
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  5. Parthy

    Parthy Air Warrior Senior Member

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    ^^^ I seriously hate this guy for his way of approach to any problems.. Just like giving the authority of deciding the fuel price to the corresponding Oil companies.. He has not taken any productive/constructive steps towards controlling the inflation and lowering the commodity price used by a common...

    He's just trying to cover his inability to control the inflation by simply pointing to other facts.. Seriously, I can't believe why Dr.Singh who himself a pioneer economist holds this guy as finance minister...

    Till date I was believing and having some hope on Dr.Singh but am lost with him now. We can't leave our country into the hands of a man who's not capable of control his ministry which he's supposed to do.. WE NEED A REVOLUTION AGAINST THIS GOVERNMENT. :mad2:
     
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  6. The Messiah

    The Messiah Bow Before Me! Elite Member

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    Wrong.

    We need a revolution against the whole political system in this country.
     
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  7. Parthy

    Parthy Air Warrior Senior Member

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    Car owners may not get subsidised diesel: Government

    With passenger cars consuming about 15 per cent of the diesel, the government on Thursday indicated that it might do away with the subsidy enjoyed by such vehicle owners.

    "...we can accept your (Opposition) suggestion and try to work out what mechanism could be found out so that this section (diesel car owners) are not subsidised," finance minister Pranab Mukherjee said replying to a debate on price rise in the Lok Sabha.

    The government gives a subsidy of Rs 6.08 per litre on diesel.

    While the prices of petrol are linked to market rates, the government directly and indirectly compensates the oil marketing companies for losses on account of sale of diesel, kerosene and LPG through subsidies and oil bonds.

    Under pressure to keep its finances under control the government has already indicated that it was keen on freeing prices of diesel and cooking gas (LPG) but retaining subsidy on kerosene which was used by poor.

    In June, while increasing prices of kerosene, diesel and LPG, the government had slashed customs and excise duties on petroleum products to mitigate the impact of price hike on common man. It took a revenue hit of Rs 49,000 core per annum.

    India imports about 75 per cent of its total crude oil requirement.

    Mukherjee said out of total consumption of diesel, 10 per cent is used by industry, 6 per cent by railways, 12 per cent by the agriculture sector and 15 per cent by car owners.

    As much as 8 per cent is used for power generation, he said, adding buses and trucks consume 12 per cent and 37 per cent respectively.

    Mukherjee said that despite price increase of petroleum products in the recent past, the under recoveries of state owned oil companies was still around Rs 1.22 lakh crore.

    JD-U leader and NDA convenor Sharad Yadav had questioned the government's policy of providing subsidised diesel for consumption by luxury car owners, telecom tower companies, malls and restaurants.



    Car owners may not get subsidised diesel: Government - The Times of India
     
  8. Parthy

    Parthy Air Warrior Senior Member

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    What a clever statement and idea by our Hon 'able Finance Minister Ji.... What did this government did when the CAG lashed report against private Oil companies exploiting the Oil reserve in India illegally...

    Below report says,


    - report courtesy KG Basin Oil Scam - Reliance Mukesh Ambani Probed | FreePress India

    They say they considered poor man and hence holding the subsidiaries for kerosene.. how come?? :omg: Indian politicians do favor only people who use bills in their billion dollar home's toilets, by getting some bills from them.. :mad2:

    Give retirement to all these Grey hair politicians and send them home.... :rolleyes:
     
    Last edited: Aug 4, 2011
  9. Phenom

    Phenom Regular Member

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    I hope they don't get any political concensus.

    Yesterday Yaswant Sinha was saying how BJP doesn't want a high growth rate that leads to high inflation. I hope these parties don't decide to kill off the economic growth just to stop the inflation.
     
  10. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    the government need not worry any more it seems.

    with the fears of US economy slipping back into recession increasing a lot of growth and the demand in the market will slow down, and so will the price rise and inflation.

    will they in the time being address the supply constraints and help add capacity building, one will have to wait and see the outcome.

    that is how deliberate wrong reporting happens. it was the left parties that asked for the vote on price rise, which was rejected by a margin of something like 50-300
     
  11. Daredevil

    Daredevil On Vacation! Administrator

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    Why do you need political consensus to control inflation?. Inflation is usually caused due to supply side constraints, excessive liquidity in the system or wage inflation.

    What Pranab Mukherjee needs to do...

    Supply side constraints - Strong actions need to be taken on the hoarders who store excessive supplies to artificially increase the demand and the price rise. At the same time, GoI needs to release the grains rotting in the FCI go downs all over India and control the prices in the market. There is also need to establish better supply chain systems, preferably by private firms to drive competition between them and thus providing supplies to the common man at reasonable rates.

    Excess Liquidity - RBI has already sucked out excess liquidity by increasing repo rates (interest rates) 11 times in the past 7 months or so making the borrowing of House loans, auto loans expensive. More increase in repo rates will have no effect on inflation but can inadvertently affect the growth rate due to decreased consumption by consumers.

    Wage Inflation - Socialist and populist schemes like NREGA are causing wage inflation. By providing money to the laborers for unproductive work, NREGA is causing wage inflation in the rural areas and as a result it increased the capital required to harvest crops and subsequent increase in price rise and in some case desertion of farming as a profitable venture. Such schemes should be scrapped at the earliest but dirty politics by UPA will not allow it and we have to live with inflation for a long time to come.
     
  12. Singh

    Singh Phat Cat Administrator

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    Global Commodity Prices, Oil Prices are severely impacting inflation as well. And the current food inflation is partly due to genuine supply/demand gap.
     
  13. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    Global Commodity Prices/Oil Prices: mate please ask a few questions, what was the crude price during 2008 internationally, what was it priced at in india, and what was the fiscal deficit then?

    food inflation: artificially created. why does the government not push the private sector to come up with cold storage houses. even today nearly 40% of the agri produce goes rot in india.

    the excuses the government gives is as absurd as possible, it is their gross inefficiency that we face what we face. you bet the excuses 5years from today will be the same.

    if these politicians, every one included, stop their vote bank based economic policies where they subsidize their vote bank through you and i, see how the economy comes back on track. let them only concentrate on reforms and capacity building will happen at a brisk pace, all they need to do is policy making and then not be a hindrance to investments pouring. they can do that much and we wont be listening to the same excuses 5years from now, but then that wont happen, because our political class loves to be inefficient.
     
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  14. Daredevil

    Daredevil On Vacation! Administrator

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    If that is true then inflation should be high in other countries as it is in India. But that's not the case. Most of the developed countries inflation rates hover around 3-4% which is sustainable and is common. But the inflation rates of 8-9% that India is facing is catastrophic. It will push many more below the poverty line as the food becomes unaffordable.
     
  15. Singh

    Singh Phat Cat Administrator

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    I will not be getting in the nuances or the role of the government. Food prices have a tremendous impact on inflation calculation here in India as compared to the developed world. And the reasons why food inflation in developed world is low and in India and in fact in all developing countries is high is because of the differences in basket of goods/indices used to calculate inflation and because of the differences in purchasing power. If the wheat prices double, inflation in India would be majorly impacted as compared to the developed world.

    Over the last decade, Indian economy and population has boomed, leading to greater demand and Agro production has just not been able to keep pace with this demand. Although there are major supply side inefficiencies which have to be tackled, but this demand driven inflation spike cannot be wished away.

    Add rising oil prices(think fertilizers, electricity, transportation), falling water levels, climate change and speculators setting commodity prices to the mix ……
     
  16. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    since we are talking base effect, the inflation has compounded in double digits yoy, had there been a lull in between and then the prices would have zoomed the way they have, still it would be understandable, but when the base is big enough then there is no real explanation to double digit inflationary pressure yoy.

    the role of the government is ever so important, they just cant be kept out of it, they have the most important role to play here.

    the talk of having a big number of cold storage is as old as i can remember, back in those days the source of information used to be economic times, the newspaper, than the internet. this is the primary cause of what why we are facing the high inflationary pressures. each year the estimate is we let rot 40-50% of agri produce, let us keep on adding this yoy and come to a figure of wastage, in 10years assuming the increase has stagnated the loss would be 4-5times to the produce of any given year, and near 7-10times the actual consumption that happens in india and of exports in india in any given year, which means if india was to see zero agri production for straight 7-10 years only then we would have seen this kind of inflation, do we still feel there would have been as much inflationary pressure, at least i am yet to be convinced.

    a very simple thing like large number of cold storages (CS) will help sort it out, but is it being addressed? and if yes, to what extent? government doesnt need to do any big thing here, the only thing required from them is good sound policy making which encourages large scale CS houses, and once the money starts flowing in let there be single window clearance in a time bound fashion. is that asking for too much? i certainly dont think so.

    talking about the global cues is done when you trade in the international market. had we done the basics right the government would have never felt to come up with as lame an excuse as global cues, because then one would not be importing agri products. it is the same with other forms of inflation the market is seeing, there are serious structural loopholes, but rather than addressing those the government looks to evade it and let there be a spiralling effect. seriously let us ask ourselves a simple question. is capacity building such a big deal that china could do it, but we cant? are reforms that the economy requires that big a deal, that they cant be done and are not being done?

    paaji, the role of the government is the most important here, and the discussion has to be about where the real problem is, we cant dance to the tunes played by the government, if they want us to believe one thing we believe it, no.
     

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