''Inflation generates in its wake not only price rise but also a sense of instability and a rudderless governance that is extremely damaging to the entire national psyche,'' Mr Singh said, while participating in a short duration discussion on the issue. Dismissing the contention of Finance Minister P Chidambaram that inflation was a global phenomenon that had been imported in India, he said it was based on a flawed reasoning.
''The US is the highest importer but it is suffering inflation not more than three per cent,'' he said, adding that the government must come out with a convincing explanation as to why inflation spiralled to 7.4 per cent in barely six weeks after the presentation of the budget in Parliament in February.
Mr Singh said inflation was not only beacuse of mismanagement of supply side but also of demand pull factor.
''Inflation is not so much a monetary problem...we have created a climate in the country that draws a staggering return of 75 per cent for investments from the US in India, resulting in a gross oversupply of money.'' Lacing his nearly 50-minute speech with anecdotes, acerbic wit and sarcasm, Mr Singh also slammed the government for its policy on Special Economic Zone (SEZ), which had triggered discontent among the farming community.
''The NDA government had initiated the SEZ policy to promote exports. We had decided that SEZs would be set up mostly in coastal India without affecting agricultural land.
''But the UPA government has indulged in an orgy of SEZ expansion, which is unacceptable,'' he said.
Arguing that agriculture in India was not only a source of livelihood but also a lifestyle, he said any shift in land use would be a disaster.
''Agriculture in India is fundamentally cultural...our society, culture, festivals and folk music are based on it,'' he added.
Mr Singh, who was the Finance Minister in the previous NDA government, candidly admitted that the BJP-led regime also could not succeed with the problem of double taxation and spurt in subsidies. In an apparent reference to foreign investments in India from Mauritius, he said the NDA government had to deal with the problem of double taxation, and ''we could not succeed.'' He, however, noted that things were still manageable when the NDA made way for the UPA in 2004.
He said even in February this year, inflation was manageable at a rate of 4 per cent and wondered what went wrong during the next six weeks, resulting in its spiralling to 7.4 per cent.
With regard to the subsidies, he said the fertiliser subsidy had gone up from Rs 33,000 crore to Rs 1,05,000 crore while those of food and petroleum products were now pegged at Rs 58,000 crore and Rs 2,53,000 crore respectively.
''This is a fiscal overhand, an exploding timebomb...The Pay Commission bills are yet to come...it is a fiscal trap,'' he observed.
Mr Singh said it was a known fact that subsidies had not benefited the farmers and the real beneficiaries were traders.
The rise in prices of wheat, pulses, rice and vegetables had hit the common man hard and all the attempts of the government to justify it would be futile.
He also warned the government against its reported move to control the cement and steel prices, saying the regime of control would drive the commodities underground and lead to blackmarketing.
''The problem is that there are far too many economists in the UPA government and the results are there for everyone to see,'' he quipped.