Dear Sir,

This refers to your Edit Feeling the pressure of Retail Inflation ( May 13). The very high Consumer Price Index at 7.79%  and the The Consumer Food Price  index at 8.38% in April 2022 affect the poor and lower middle class segment particularly in the unorganised sector not only economically but socially and emotionally.Further the economic growth and the benefits expected of it to the society also gets jeoparadised because of continuing inflation upsetting all the calculations.The need to contain the soaring inflation therefore on an ongoing basis  to save the economy and the people is paramount and the authorities have  no choice but  to think of some innovative methods to come out of this mess.  

Since such a high level of inflation takes away the real interest rate and savings habit of the society and insulates the rich from  their spending habits and maintaining their living standards simultaneously, it is time to revisit the Fiscal Policies and Monetary policies and find ways and means  to fund oil requirements separately (which seem to be the major cause of inflation) and free the economy from the challenges of high fluctuations in oil prices because of Geo political and other reasons like exchange rates and interest rate changes based on sharp movement of funds. Insulating the oil and gas prices from the construction of price index  in view of its chain effect right from salt to camphor would be of immense relief to save the situation. Time has come  to think of raising  non inflationary revenues like Security Transaction Tax or some direct taxes which have no cascading effect in the pricing of daily consumption items of the poor segment of the society. It would be a very wise move to have revenues with and without inflationary impact and the Government and RBI would have to  have a coordinated approach  to arrest the inflationary trend and expectations with policies  that do not get hit people of average means because of  the imported or domestic inflation.

T.V.G Krishnan

 ( Slightly modified version of this letter appeared in Economic Times Dated 14/05/22).