The problem is so deep that it is not going to be solved with a little relief. A little bit of relief will make little difference to inflation and its associated problems. Therefore, it is necessary that the government should consider this problem holistically.
The central government reduced taxes on petrol, diesel, fertilizers and many other imported items used in factories to make them cheaper. After that many states have also reduced their share of tax on petrol and diesel. This is a step in the right direction. It will be welcomed. But it is clear that this step is not enough. And not at all in that case, when the gradual increase in the price of petrol and diesel is being continued. The effect of this may be that the relief now received in the next few days may become ineffective. However, even if this is not the case, the problem is still so deep that it is not to be solved with a little relief. On the one hand, there are global aspects behind the inflation this time, on the other hand, the average income and consumption of common people inside the country have already broken so much that even a little relief will make little difference to inflation and its related problems. Therefore, it is necessary that the government should consider this problem holistically. It is only now that the news has come that due to the exemption given in the tax now, there will be a dent of one trillion rupees in the central treasury.
To compensate for this, the government is considering taking a loan from the market. Whereas in this year’s budget, it was already estimated to take a loan of more than Rs 14 lakh crore. The increasing debt burden makes it expensive for governments to issue bonds. Then it should also be kept in mind that foreign investors are withdrawing money rapidly, due to which the foreign exchange reserves are continuously depleting. In such a situation, the solution to the problem can be found only through a holistic change in economic priorities. What is needed is that the government should fill its coffers with an increase in direct taxes on the very rich. It may also consider levying wealth and inheritance tax. This should strengthen the treasury and give wide exemption in indirect taxes. This will make things expensive and the purchasing power of the common people will increase. This will accelerate economic activities. But the real question is whether the common people and the economy are somewhere in the priority of the government?
