This refers to your Editorial Up and Away(BL dated 16/05/22). The ever soaring Consumer Price Index at 7.79% and the Consumer food Price Index at 8.38 experienced in April not only affect the poor and the lower middle classes particularly in the unorganised sector but also affect them economically, socially and emotionally as well. The inflation index prevailing is far above the one fixed  at 6%  tolerance level by the monetary policy Committee of the RBI reflecting thereby the distortions in arriving at the realistic situations at the ground level and the ineffectiveness of the policy measures.  As  low cost of funds  helps the economy to grow , low cost of oil and gas helps the country to keep the inflation low and make both the economy and the people prosper fast also needs to be recognised and factored into in containing the cascading effects of oil price and gas price increases on inflation and inflation expectations.  This seems to be a great miss or lapse in the fiscal policy calculations upsetting the other calculations in respect of macroeconomic factors.  This unfortunately takes away all connected and interlinked socio economic benefits and issues in the society. Time has come to think of undocking oil from the inflation shuttle and find out ways and means to fund oil requirements separately and remove the cascading effects of increase in the prices of oil and gas and adequately factor into this vital aspect in the Inflation index computation.  The need has arisen to revisit the fiscal policy and think of innovative measures to augment the revenues in such a way that the revenues which have inflationary connotations are minimised and those revenues which have non inflationary characters are increased. This sort of approach would turn out to be a win- win situation for the Government, RBI, the Economy and the people particularly in the poor and lower segment. There are umpteen ways to augment the non inflationary revenues like STT, and other direct taxes.

T V Gopalakrishnan

Bengaluru.      

( Slightly edited version of this letter appeared in the Hindu Business Line dated 17/05 /2022)