The mild optimism in India following the resurgence of the rupee was bluntly quashed as wholesale price inflation for the month of September hit its highest point since the beginning of the year. The First Post reports:
A massive increase in food prices has been a major driver of wholesale price inflation. Onion prices rose by a massive 323% in September in comparison to the same period last year. Vegetable prices went up by 89.37%. Fruits were up at 13.54%. And all in all food prices were up by 18.4% in comparison to the same period last year. Half of the expenditure of an average household in India is on food. In case of the poor it is 60% (NSSO 2011). Given this, the massive rise in food prices, hits what the Congress led UPA calls the aam aadmic [common man], the most.
Despite a new Reserve Bank of India chief, controls on gold imports to shore up dollar reserves, and a desperate attempt by the ruling Congress party to strengthen the economy before next year’s elections, India’s deep-seated economic problems are impossible to ignore. The current deficit stands at 8.7 percent of GDP, twice the government’s initial target. Foreign direct investment has slowed down, and India has to admit that the good times are over.With the challenging BJP and its leading candidate Narendra Modi campaigning on promises of economic development and reform as witnessed in Modi’s home state of Gujarat, Congress ought to get its act together and fast. Come next year, voters will not be very forgiving.[Rupee notes image courtesy of Shutterstock]