"Yesterday Petrol and Diesel price was hiked and today we are hearing the news of hike in LPG cylinders. This will have a significant impact in our household budget as prices of essential commodities like onion, potato, tomato and fruits are already sky-rocketing. Acche din is yet to come,"says Mrs Kaur who is a resident of south Delhi.
The Narendra Modi Government has inherited high inflationary pressure from the previous Government and it may take if not few months than a year to curb price rise. High inflation and hoarding was one of the key factor behind last UPA Government's downfall, hence, expectations are at peak from the Narendra Modi Government with inflation rate hovering over 8 per cent in May.
Onion prices have shot up 40 per cent in the last two weeks to Rs 18.50 per kg at Lasalgaon, the country's largest wholesale market for the edible bulb, despite the imposition of minimum export price on the vegetable to check its domestic rates from going up. In Delhi sabzi mandi onion prices is around Rs 25 to 30 per kg currently. Expectations of poor monsoon(due to EL Nino weather phenomenon) has further lead to rise in price of essential commodities.
"The price of onions has increased once again. It is becoming very difficult for the common man to survive. Modi sarkar is not doing anything for the welfare of citizens. They are just raising prices again and again", another angry resident said.
On Monday, Petrol, Diesel price was hiked by State oil marketing companies adding to the cup of woes of common man. This was close on the heels of rail fare hike by 14.2 and freight rate by 6.5 per cent. Prices for dairy products, which account for nearly one-sixth of the goods in the retail food price index basket, rose by more than 11 percent in May from the same month a year earlier. The Reserve Bank of India may have to extend its monetary policy keeping in mind the high food inflation. "To be sure, the RBI cannot address food inflation via interest rates," HSBC said in a recent research report. "But the RBI still needs to contain inflation expectations in the interim, and prevent second-round effects from driving up core prices."
India's fiscal deficit in the first two months of of the fiscal year(April-May) touched 45.6% of the full year target of Rs 5.3 trillion, a six year high due to high non-plan expenditure and low revenue receipt, due to spurt in oil prices. High fiscal deficit, high inflation and slow growth rate have further disappointed the people.
Fiscal deficit at six-year high of 45.6%
Iraq crisis has worsened the situation
The ongoing Iraq crisis has worsened the situation with significant surge in oil prices. The recent hike in petrol, Diesel and LPG prices is result of Iraq crisis which has spooked the oil and currency market. Crude oil prices have shot up to a nine-month high of over USD 115 per barrel. Since India imports 79 per cent its oil and subsidies fuel, higher oil prices are particularly painful for Asia's third-largest economy.
What can you expect from a month old Government?
The Modi Government who has a massive mandate has just completed a month in office and has no magic wand to fight inflation, CAD immediately. The people who voted him to power has lot of expectations and the Government will atleast take some time to implement useful policies for the economy.