Battling Inflation

India is managing inflation at multiple levels. The last time India cut a sorry figure was when we could not meet the supply for our growing demand. The only way the Government can battle inflation is to manage supply. Policies like the PLI scheme are a good example of producing more and solving the issue of inflation. The fact that the Government is encouraging production will definitely help in battling inflation.

The Government’s response to oil prices and the reduction in fuel taxes are signals that the government would respond to any emerging needs. This is going to keep the supply in check. Hoarders and other speculators would need to think twice. The fact is that the Government will be willing to do what it takes to help tame the beast. “How much?” is something we don’t know.

Inflation seen in all essential goods was a shock. The Government managed to bring it down in 6-8 weeks. However, the Government needs to be far more vigilant and watchful to disruptions in supply so it doesn’t go out of hand. Keeping prices in bands is going to be a challenge. If the Government manages to keep prices in check, it would result in India managing inflation better than the world.

The Government must align policies to ensure long-term supply in line with demand. Clamping down on shortages is going to be our need of the hour. The Government has to be in a state of readiness to keep inflation at bay for a long period of time.

There is no alternative. The Government does not have a choice.

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