Despite growth pegged at over eight percent, India's economy needs as much careful handling now as during the post-2008 slowdown. Curbing headline inflation must be top priority, mandating a multi-pronged strategy. The UPA must stop pussyfooting, not least because price rise has joined corruption in the list of major public grievances against it. True, inflation moderated in April to 8.66 percent, but that's far above RBI's 4.5 percent medium-term target. More, the figure may hit double-digits when gasoline price increase and an expected diesel price hike make commodities, transport and inputs for industry dearer, The Times of India writes in its editorial. Excerpts: RBI's recent interest rate hikes, though hawkish, didn't provoke many howls. There's growing realization that battling price rise isn't at the cost of economic expansion. Rather, protracted high inflation is itself menacing growth. In fighting inflation, conventional wisdom advocates price-fixing for fuel. But global trends mandate decontrol despite a near-term inflationary impact, which too can be managed by cutting taxes on fuel. Price-fixing simply means deferring the shock for later, at which point it is bound to hit harder. All of this mandates more, not less, reform. Inflation being both demand and supply driven, government's action is as crucial as RBI's. Fuel price deregulation must go on, the eventual aim being to push private retail as a means of lowering prices via competition. More immediately, there's no arguing against trimming heavy taxes on fuel to contain the inflationary impact of rising prices. More so, since decontrol means fiscal relief, reducing a subsidy threatening to jump the budgeted sum for the fiscal year by almost four times. Instead of relying on taxing fuel, revenues should be mobilized with accelerated disinvestment and sector-specific reform attracting private funds. Unnecessary government expenditure too can be trimmed for the sake of fiscal rectitude. The RBI sees food inflation as acquiring a systemic nature. With India's growing food needs, rural skills, farm productivity and choice-based delivery systems must match up. Massive overhaul of agriculture and wasteful, corruption-ridden distribution networks is needed to avoid recurring food crises. While boosting investment, retail and marketing reform will help eradicate the costs and inefficiencies of having a plethora of intermediaries and traders in the commodities market, with their baneful fallout on denuded farmers' incomes and high shop prices. Funds are required for crucial tasks such as making agriculture technology-based, building farm-to-fork infrastructure, boosting irrigation-linked innovation or promoting research in genetically modified foods. As industry voices point out, structural reforms geared to dismantling supply-side impediments must accompany monetary tightening aimed at raising borrowing costs. Else, all we'll do is tranquillize growth without beating inflation, bringing India's growth story to an end. Is that what the government wants, and does the UPA think it can fetch votes this way? __
