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Inflation After remaining near 12 percent the Indian inflation rate has ‘suddenly’ fell sharply below 10 percent. According to some reports published in leading Indian newspapers inflation rate had fell sharply from 10.72 percent to 8.98 percent after the period of 21 weeks on November 1. It has been said that decline in the price of fuel items like naphtha, jet fuel, furnace oil and light diesel oil is the reason behind the decline in inflation rate in India. Decline in the prices of iron, undefined oil, fruit and vegetables, tea and spices have also played an important role. The inflation rate was recorded 12.42 percent for the week ended on September 9.

Reasons The sudden decline in inflation rate has given rise to many doubts. Earlier it was being expected that the inflation rate will slip down to single digit after the harvesting season. The sharp decline in the inflation rate smells some ‘foul play’. Elections have been scheduled to be held in six states in the months of November and December and Lok Sabha elections will be held early next year. It can not be denied that decline in inflation rate has brought to “bring cheer to the UPA government”. It was being expected that the price rise will be major issues during these elections. Though the prices of ‘house hold’ commodities have not declined but the inflation has suddenly come down. From the present circumstances it looks that the reasons of sudden decline in inflation rate are political instead of economic.

Face-Saving Two months ago, Congress led UPA government was under attack from the opposition because of various reasons. Its failure to adequately tackle communal violence in Orissa and Assam, serial bomb blasts in some major Indian cities, natural calamities and rising prices had brought centre government’s popularity to its lowest point. Decline in the popularity of UPA government was the major reason that all its partners had tried ‘all means’ to save it form the earlier downfall during the trust vote motion on the issue of Indo-US civilian nuclear deal. Now all the ‘burning issues’ have cooled down and only inflation was the issue that needed to be ‘dealt with’ in time. Thus by bringing down the inflation rate, without any ‘genuine decline’ in the prices of daily-use commodities, the UPA government has cleared its way to go into the elections with some ‘face’.