India's upward moving inflation can be controlled if govt desires: Kaushik Basu

ndia’s June WPI was close to 13%, marking the highest level in almost the past three decades

India’s 30-year high wholesale price inflation is driven by fuel price rise and this has nothing to do with global crude oil price rise. It is because of higher tax collected by the government, which is a policy mistake, former chief economic advisor Kaushik Basu has said.

He has also suggested that this can be corrected if the government desires and it should be done seeing the misery of households, who are heavily indebted.

“India’s WPI inflation is at a 30-year high driven by fuel price rise & this is not because of global price. 56% of the Indian price is tax collected by govt. This is a policy mistake. Fuel price needs to & can be controlled. Many households are heavily indebted & suffering,” Basu said in a tweet.

India’s June WPI was close to 13 per cent, marking the highest level in almost the past three decades. This is in contrast with other emerging economies where inflation is decadal low at present.

Basu has also cautioned about wholesale price inflation getting generalised.

"Generally wholesale price inflation seeps into retail price inflation, so that this is a very alarming situation for India because prices are rising quite rapidly," Basu, also a World Bank economist, had recently said in an international event.

Basu, who has served as India’s Chief Economic Advisor in between 2009-2021, also suggested that India needed a much better curation of policy once again between the Reserve Bank of India and the finance ministry,

"I feel not enough is happening once again between the Treasury, the finance ministry and the central bank for the inflation," he cautioned.

Basu said if retail prices begin to follow the wholesale price trend, which usually happens, it would be bad for poor in the country, who are already facing the brunt of higher food prices.