Learning from the Lanka experience, it’s time for the Govt to exercise financial discipline

Last Wednesday, the Indian oil companies hiked the cooking gas price by

`50, making the price of the cooking gas soar to `1,053 in the Capital. Cooking gas prices directly affect the common man. And it is not just the petroleum products that are on fire, every other essential item is showing an upward

trend, be it vegetables, groceries or everyday toiletries, all are going beyond the reach of the commoner. Almost every section of society is finding it hard to

manage its spending due to the sharp rise in the prices of essential commodities. LPG, edible oil, pulses, vegetables, petrol and diesel rates, and most commodities that are used in every household, have become too expensive and are burning a hole in the pocket of the common man. Inflation is at an all-time high in the country and showing no sign of plateauing. Retail inflation was 7.04 per cent in May. It remained above the RBI’s tolerance level for the fifth consecutive month. The food basket inflation was 7.97 per cent in May 2022, as per the data released by the National Statistical Office (NSO). Inflation in ‘oils and fats’ in March soared to 18.79 per cent as the geopolitical crisis due to the Russia-Ukraine war pushed edible oil prices higher.

The only respite can come from a normal

monsoon. The RBI Governor has projected

inflation at 5.7 per cent in 2022-23, with Q1 at 6.3 per cent; Q2 at 5.8 per cent; Q3 at 5.4 per cent; and Q4 at 5.1 per cent. It means that hard times for Indian middle class and lower-income groups are here to stay. While there’s little the Indian Government can do about the war in Ukraine that has pushed the prices of edible oils over the roof, it can certainly do something about the fiscal discipline in the country. Limiting its

non-plan and wasteful expenditure, it can manage the economy better. It has to check the falling value of the rupee vis-a-vis dollar and also FIIs withdrawals from Indian markets. As they say, you can fake everything except the economy, because when your buying capacity is reduced, you know that there is something wrong with the economy. No one can convince you otherwise. This is exactly what

happened in Sri Lanka. We should learn from their mistakes rather than making our own.