Inflation at zero is mere illusion

Bullshit is the word I would like to use when people talk about India's inflation is at its 30-year low and is at almost zero levels. It is sad that Indian audiences are so gullible to buy this glaring lie.

The Indian government will go to any extent to fool the public. Let me lay down a small fact. Statistics such as the inflation number are all manufactured at the government factory - especially when the stakes are high. The election season is around the corner and there is power to lose.

The code of conduct is now applicable to all contesting political parties and soft numbers on the inflation front surely is one good way of garnering big votes. How about the ruling party not declaring any leading or mis-leading numbers after the code of conduct is applicable? Mr Chief Election Commissioner, are you listening?

The other issue is the timing of the release. Inflation numbers were released during trading hours every Friday. Since, these numbers moved markets, the government, a few months back, decided to release the numbers post market hours every Thursday.

The numbers continues to rise and the argument thrown was that proper interpretation of these numbers was essential. But, as the inflation numbers started to soften, the government started releasing the numbers during market hours on Thursday. Who is responsible for this ad-hoc behaviour?

Yet, the softening numbers have no impact in our homes. If you need a quick reality check - ask the lady in your home. The answer is sure to be in the negative. The consumer basket has been consistently moving upwards. By all estimates inflation for the consumer is in double digits. The learned section of the society put the real inflation at a little over 10 per cent corresponding to the same week last year. But, in all probability the real inflation is somewhere in the 15 per cent-18 per cent range. Now, that's grim.

The real difference is the constituents of the index. The Indian government plays with the whole sale price index (WPI), while what matters to the aam junta is the consumer price index (CPI). The impact for a softer WPI was on the back of a cut in fuel prices and softening metal prices, down 16 per cent and 22 per cent respectively from their peaks. But for an ordinary consumer softening fuel and metal prices form a small portion of his / her direct or indirect consumption.

In fact, WPI ex-food is already in the negative zone. That's just another statistic. For the consumer, food articles have the maximum weight. Food led inflation continues to rise, albeit the pace has slowed. Demand continues to remain strong on this front, at least for now.

Various countries in the world report the CPI, not the WPI. Therefore, when globally, the inflation rate is falling, inflation in India continues to remain in its high teens. The Indian government says that inflation in India is softening, but that's nothing but a big lie. The government talks about reconstituting the WPI and also shift to CPI. That is it - just talks. The reason not to do anything beyond that is because shifting to CPI requires a lot of courage.

The basket for an average Indian consumer carries the maximum weight on food items. And bringing it down to the near zero levels means a lot of traders out of the business. There are hoarders sitting on huge supplies locked in their warehouses, rationalizing release of these food items. This keeps supply in check with demand.

A clampdown on these agencies is a must. But, that won't happen because there are strong hands supporting these hoarders. And many of them are agencies of the political parties. So, a strong political will is absent.

Inflation at zero is anything but reality. It's a mere illusion created to create a smoke screen for vested interests. I would vote for the party whose election agenda would be to assure India's inflation, in these depressing times, to be zero and not 15 per cent-18 per cent. But to that happen in India would be like living in Utopia.