The root cause of so-called global inflationary trend is economic liberalization and globalization. The complete freedom to private sector without strict regulation and continuous monitoring of price of each essential or non essential commodity in oil, energy or food sector gives liberty to manufacturers and traders to recover exorbitant profit on the product they produce and sell.
Depending upon the demand and supply available in the market businessmen hoards the commodity and realize maximum profit from their products. When we discard the principles of socialism in toto, capitalism comes into play and those who are rich grow richer and richer whereas poor and downtrodden are subjected to shoulder the pressure of price rise and the said inflationary pressure. Those who are rich do not at all feel the pinch of inflation of continuous price rise. Rather rich person gets mental satisfaction when they pay more for any commodity and especially when they observe that other than them (rich person who constitute hardly 5% of the population of any country particularly in India) general mass cannot afford buying the commodity. Ego of rich is satisfied and Non- rich persons suffer from frustration, depression and deprivation of normal needs for survival. Such situation causes widening of gap between rich and the poor and also social conflict and rise in crime.
In realty sector prices of flats in the apartment has been going up and up. Owner and builder of the apartment are realizing at least 10 times of what they spend in construction of flats and purchase of land. Poor in general cannot afford a flat of value 25 lacs and more. 95 % of the Indians are not in a position to have a livable house.
In education field, owner of schools, colleges and other higher education institutions are charging at least 10 times from students as tuition fee compared to what they spend on each student (capital and revenue expenditure together). Now a days tuition fee per student for MBA, PGDBA and engineering is on an average rupees six lacs whereas for of medical courses it is more than twenty five lakhs. Even in private high-fi good primary schools, normal expenses per year crosses one lac rupees. We can very comfortably assume that normal expenses for higher study comes to Rs.25000/- per month whereas per student expenses normally done by most of the colleges in my estimate is note more than Rs.2000/-.. Government is silent spectator of exploitation of students only because it is politicians, MP’s , Ministers and big businessmen who own the colleges .There is no control on tution fee colleges recover from students.
In health sector too the position is very much pitiable. There is no arrangement for adequate check up , there are no quality doctor and they is no sincere will to serve,dignose and take care of patients who are admitted there in government run hospitals in most of the towns . As a result patients are constrained to take the help of scarce private nursing homes and pay high charges for treatment.
In oil sector government is dependent largely on prices of crude oil imported from oil producing countries. Since crude oil prices are rising and rising continuously government is bound to raise the price of oil products. But to please the mass voter and to salvage vote banks our politicians are providing subsidies as charity to voters. Similarly in the case of fertilizers and food supplies to poor and downtrodden people government has to bear the burden of subsidy. This unbridled distribution of charity also eventually results in tax burden on consumers, traders and manufacturers and ultimately gives rise to price rise in all sphere of life. If government decides to avoid giving subsidy, then also prices are bound to rise because commodities are all interlinked to prices of food, fertilizer, oil and energy prices.
Inflation cannot be checked until government regulates the price of each product and services honestly without doing dirty politics and without indulging in corruption.
At last I am of the opinion that the government has to have strict regulation and control on businessmen in the era of privatization, globalization and liberalization. We cannot afford complete socialism of seventies or eighties and neither can general mass live comfortably without feeling the pinch of inflation under the shadow of complete trade liberalization and globalization.
We have to have Mixed economy, controlled and administered prices to keep happy general mass. Traders, manufacturers and service providers may be facilitated and given freedom to produce the products but cost of the product and the quantum of profits have to be regulated without any biased attitude and in a transparent manner, not giving scope to corrupt officers to act as per the whims and fancies. Unrestrained profit making is the root cause of inflationary pressure we are facing in the country and the entire blame for such pitiable position of the general mass is the dirty politicians and corrupt officers who are working as partners of the politicians in sharing unfair money.
It is therefore unacceptable that global inflation is the root cause of Indian inflation and continuous price rise in all sectors. I am not the economist, neither a good writer but I am of strong conviction that it is the government who can cure the cancer of inflation.
Danendra Jain
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