IN April, the wholesale inflation in India rose to over 15 percent on an annual basis. Higher fuel and energy prices have contributed to this. The record inflation is affecting the common man badly, more so the lower middle class and poor families. Figures by the department for Promotion of Industry and Internal Trade (DPIIT) present a grim picture. Food articles inflation in April stood at 8.35 percent, up from 8.06 percent in March. Similarly, fuel and power basket inflation rose to 38.66 percent from 34.52 percent in the previous month. The retail inflation in April has been the highest since May 2014 at 7.8 percent. This has meant that the cost of food, transport and healthcare have all risen by 50 percent since the middle of last year forcing people to cut down on their spending to make ends meet.
One major reason for this is the steep escalation in the cost of oil in the wake of the Russian invasion of Ukraine in February. As things stand, the war has caused higher than expected inflation, supply chain disruptions and volatility in financial markets. And India can’t be immune to this for long if the war drags on. And this is happening at a time when the world economy was gradually recovering from the debilitating fallout of the Covid-19 pandemic. The countries were slowly opening up and letting the economy function normally. International travel was also returning to pre-pandemic levels. India was taking steps toward a self-reliant economy also called Atmanirbharta. But the war has unraveled it all somewhat. It has set off destabilizing factors that are beyond any country’s control as long as the war continues.
The United Nations on Wednesday said India is expected to grow 6.4 percent in 2022, well below the 8.8 percent growth in 2021. On the ground, this would translate into loss of lakhs of jobs at a time when the country is reeling from rampant unemployment. Coupled with inflation, this makes a combustible situation unless the government takes urgent steps to address it. More so, in India when the successive virulent waves of the pandemic have hemorrhaged the economy. The resumption of economic activity to pre-pandemic levels is important to restore the millions of jobs lost to the pandemic. At the same time, the world needs to work together to end the war in Ukraine. That alone will make a redeeming difference to the global economy and in turn to inflation.
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