Tuesday, March 27, 2007

The War on Inflation...Business World article

After arm-twisting producers to push down the prices of sugar, steel and cement, the government is now considering lowering the price of milk, oilseeds and fertilisers as part of its campaign to tame inflation. Our resident astrologer predicts the future of the war on inflation.

1 April 2007: After a huge rally by oilseed farmers protesting against the maximum price, the government announced a minimum price to be paid to farmers for oilseeds, which will be higher than the maximum price paid by consumers. The difference will be recovered through an oilseeds cess to be paid by oil companies.

15 April: With WPI inflation going through the roof, thanks to a big jump in the price of eggs and fish, the government today imposed price controls on eggs and fish. "It's aimed at buying support from the fish-eating Goa population before the assembly elections there," said a cynical opposition member.

1 May: Milk producers have complained that they were forced to charge higher prices because of the high cost of milch cattle. The commerce minister has imposed a price ceiling on cows. Meanwhile, the plea by oil companies that they have nothing to do with oilseeds has been rejected.

1 June: WPI inflation numbers have jumped this week on account of a sharp rise in the price of gingelly oil (up 12 per cent), copra (up 9 per cent), zinc ingots (17 per cent), fluorite (48 per cent), fire clay (29 per cent), steatite (20 per cent), magnesite (13 per cent), felspar (4 per cent), kaolin (3 per cent) and capsules other than vitamins and antibiotics. The government has promptly announced price controls on all these items.

15 June: Egg producers have complained to the finance minister about the high cost of hens, which they claimed was the major reason for the rise in egg prices. A decree has since been signed by the finance minister imposing a price ceiling on hens.

30 June: Copra producers have argued for a level playing field. Conceding to the force of their argument, the Prime Minister today issued an order that no coconut in the country should sell for more than Rs 6.75 each.

1 July: The PM today amended his order on coconuts and announced that large ones (measuring more than 4 inches in diameter) may now be sold at a higher price of Rs 7.25 each.

15 July: With eggs, fish, felspar, kaolin and coconuts being sold in the black market, the government has threatened severe action. The Enforcement Directorate has been told to crack down on money laundering by fishermen. "Every rotten egg trader should be hanged from the nearest lamp post," thundered the home minister.

1 September: The dates for the Gujarat state elections have been announced. In other news, the government has imposed price controls on dhokla, thepla and khakra.

15 September: The ceiling on zinc prices has led to zinc producers shutting shop, as a result of which zinc users have to use high priced imports. To counter this anti-social behaviour, the government today announced that each zinc producer must produce a minimum of 10,000 tonnes of zinc or face immediate execution.

1 October: Stung by criticism that the government has done nothing to stem the rise in prices of services, price ceilings have been imposed on dance bars.

15 October: Gearing up for the 2009 Parliamentary elections, the finance ministry today released Volume 1 of the Price and Production Control Handbook (932 pages) containing detailed lists of items under price ceilings and production quotas. Volumes 2 and 3 will be out soon. "We are proud that we have been able to bring out this document in the 90th year of the founding of the Soviet Union," gushed the finance minister, whose designation will soon be changed to Comrade Chief Price Controller. In other news, the Republic of India today changed its official name to 'The Union of Indian Socialist Republics' (UISR).

The article is available here.

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