These days, everyone is talking about inflation. Everyone including the financial analysts are worried. All are praying that the rising prices and the oil scare should ease soon and we will then be able to see better times. But inflation did not grow overnight and it is not right to say that the financial experts did not see it coming. The reasons for this inflation figure, should have been addressed and taken care of, before it blew up so harshly in our faces. Now, that we are in this mess, our Finance Minister, Prime Minister and their illustrious teams of economists should take real and effective positive steps.
We all know that the inflation caused due to the sky rocketing prices of petroleum products, could be a major hindrance to the country’s growth. Our government should not aggravate the problem by subsidizing supplies. The government should clamp down on demand and allow prices of petroleum products to rise to International levels, say $2 per litre for petrol. This would prevent wasteful expenditure. The government should also ban needless use of cars in a planned manner. Buses, trucks, housing and railways should be subsidized, with massive cuts on service taxes and direct subsidies for carrying passengers and cargo at cheaper rates.
The government should also order private companies to subsidize essential food items and if necessary, give them tax benefits. Investment in housing should be encouraged, instead of being curbed, as such investments have a cyclical impact on all related industries and services and thus accelerate growth.