With Indian economy already in troubled waters, more bad days lie ahead for us even after the lockdowns and restrictions are called off. Fuel prices have reached almost INR95 in Guwahati and in some other metros, it has crossed the INR100 mark, the first phenomenon after Independence. With the increase in fuel prices, the cost of commodities automatically goes up. And hence, we may witness the increase in prices of commodities of our day-to-day needs. This seems to be fine until it affects the higher-income people, but as soon as it starts affecting the basic income strata of citizens, it becomes a national problem.  The pandemic-induced lockdowns have further worsened the situation for India which was hoping to improve its economic situation. Joblessness, rising prices of commodities and virus-induced shutdowns, have been giving the citizens a harrowing time.

The latest figures indicate that the retail inflation in May has spiked to 6.3 percent and the wholesale price index shot up by over 12 percent. Notably, the Reserve Bank takes the retail inflation measure as the benchmark for settling its monetary policy. Earlier, the Reserve Bank in its bi-monthly review kept the policy interest rate unchanged, stating that the recovery process in the economy needs support from all sides. And since, it has stayed away from raising interest rates to encourage growth. What is bothering the experts is the fact that whether immediate inflation control is a right policy or it’s just a transitory phenomenon needing some indulgence from policymakers. While fuel prices can be attributed to rising international oil prices, unemployment and ease of business in the country largely still remain among the government’s bigger problems.
Having said this, the international price spurt apart, fuel price in the domestic market is the end result of huge imposts both from the centre and the state governments. Neither petrol nor diesel are included in the GST and as a result, the states are clamping large doses of tax on petroleum products. And when questioned about the same, the state governments point out that the cess levied by the centre on fuel is the reason behind the rise in prices. Now, this must generally mean that the union government would not have to share the cess charges with the states, thereby, leaving them high and dry. This brings us to the crux of the moment – where do the states generate their additional resources? This leads to price rise in a place; however, today’s pain may be a reward tomorrow! It is time we need to let our country’s economy recover after the devastating effects of the second wave of the virus. There may be a bit of price hikes on the way but it would help us to recover the limping economy in the longer run.