The comparative figures and data related to Indian inflation were made available in the Lok Sabha by the Finance Minister Arun Jaitley, in reply to a question, on July 18, 2014. The data reveals that the inflation problems of India are its own-making and there is no such trend in other Asian countries. The Indian government for the last 4 years has been blaming international factors for the persistent Indian inflation. This blame seems to be at odds with the factual data.
Country Year (2012) Year (2013)
India 10.2% 09.5%
China 02.6% 02.6%
Korea 02.2% 01.3%
Pakistan 11.0% 07.4%
Sri Lanka 07.5% 06.9%
Indonesia 04.0% 06.4%
Malaysia 01.7% 02.1%
Thailand 03.0% 02.2%
Pakistan had the highest rate of inflation amongst all the above countries. Yet, Pakistani inflation came down to 7.4% in 2013. China and Korea are the biggest oil and natural gas importers in the world. Korea does not have many raw materials and is totally dependent on imports for major minerals. Yet, we find that, though China and Korea are major oil-importers, they had the lowest rates of inflation.
There is another common factor amongst China, Korea and Pakistan. These 3 countries spend huge amounts on defense. So India cannot offer the excuse that the low rates of inflation in China and Korea are due to their lower defense expenditure.
Sri Lanka is a resource -poor nation. Ii is just recovering from a 50- year domestic war and strife. Yet, its inflation is lower than India’s. Malaysia and Thailand have very low rates of inflation. This is a testament to their very alert financial managers that their governments have. Perhaps, it is also because their people are very inflation- resistant and take their governments to task if there is a high rate of inflation.
In India, we find that there has been persistent inflation under the UPA Government. Since 2008, Government has been blaming this inflation on international factors like the high price of oil and other external reasons. The UPA Government has un-fortunately taken shelter under the excuse that the economic collapse in western countries has also affected India. If that is so, then how it is that other South Asian country have been immune to “external financial and economic factors “?
The fact is that the UPA Government has given the country a high and persist fiscal deficit. This has led to inflation. This has led to un-employment and a host of ills for the economy. Other countries, whether they have had dictatorships or democracies, have been more careful in NOT wrenching their economies through un-bearable pain.
For political reasons, the Indian government has bled the economy and led to inflicting pain on the poorer sections and middle classes. This is the main reason that other South Asian and similar Asian countries have been able to control inflation and India did not. It would be fair to conclude that India had the means to control inflation and yet did not do so for political reasons.
The attitude of the Indian government led it to face the severe electoral debacle in 2014. The lesson from this mishandling of the economy is that there will be electoral punishment if the economy is mis-managed. Even countries like China in which is not democratic are very cautious about inflation.