Indian Decade

Singh’s Inflation Troubles

Spiralling inflation and a nationwide strike put pressure on Prime Minister Manmohan Singh.

After just over a year of being returned to power, the Congress Party-led Manmohan Singh government finds itself facing a significant challenge over the issue of the country's surging inflation. Over all, it's at 10 percent, while food inflation is at nearly 17 percent.Because of divisions among the opposition parties, the government had refused to address the issue seriously.

But on July 5, the crisis came to a head. The Right, Left and centrist opposition parties joined to call a national strike (bandh in Hindi) that paralyzed large parts of India. Schools, colleges, industry, train and air services were shut down or significantly affected, with production losses estimated at nearly Rs 13,000 crore ($2.78 billion).

Bandhs have generally come to be seen as a nuisance, mostly giving opportunity for political thuggery and hooliganism. But the July 5 bandh was widely accepted as being different and unavoidable. For a change, the poor and the salaried middle class, crushed by the spiraling prices of essential foods, supported the shutdown. An SMS poll showed 60 percent approval for the bandh nationwide, while in Mumbai, India’s commercial capital, support touched 72 percent.

While the central government is trying to put on a brave face, refusing to consider a rollback of the fuel price hike which provoked the bandh, there's trouble brewing within the ruling coalition. Sharad Pawar, the agriculture and food minister, who has so far been in the firing line for the food price rise, has asked for a portfolio change. There are other signs of ferment in the governing Congress Party as well, which in the days to come will increase pressure on Singh to rein in prices if his continued leadership is not to be questioned.