Here is BJP's strategy to counter inflation

Former finance minister Yashwant Sinha of the Bhartiya Janata Party (BJP) on Wednesday asked the government to supply 25 million tonnes of food grains to the markets from 65.5 million tonnes stored in its coffers.

He urged the government to distribute stocks to the poor instead of letting them rot due to lack of storage facilties.

Sinha said the price rise can be controlled in just two months by this single step. This would have cascading effect on other prices to reverse the backbreaking inflation.

Initiating a day-long debate in the Lok Sabha over price rise, Sinha said, besides the wrong policy of pumping money to the tune of Rs 2 lakh crore a year as "stimulus" to fight global depression, corruption is the biggest cause of inflation.

Sinha said the formula he was suggesting to tackle inflation was successfully tested by the BJP-led National Democratic Alliance in 2002.

Even when hit by a severe drought, it did not allow the situation go out of hand and the people escaped unscathed as the inflation remained 3-3.4 per cent.

The NDA offered wheat and rice at Rs 2 and Rs 3 a kilogram under Antyodaya, Annapurna and food for work programme. It ensured free supplies to the drought-hit states and released grains to millers and wheat product processors.

Law Minister Salman Khurshid opposed the motion that said, "The burden of price rise on the common man is continuing" and lambasted Sinha for ridiculing the government on the inflation issue.

"You also talk of two months while prescribing your plan. Just accept that the government has a no magic wand to banish inflation," he said.

In his hour-long initiation of the debate, Sinha expressed concern that the government was harping on wrong policies like the Reserve Bank of India (RBI) hiking interest rates 11 times.

This will only push up prices from a slowdown in investments.

He also warned that throwing open the multiple products' retail to multinationals (MNCs) under the FDI will not be a panacea to reduce prices.

It will only wipe out the small traders and farmers as the experience in other countries goes, he affirmed, pleading not to yield to the United States on this score.

Sinha was worried that India is heading towards stagflation as the economic slowdown is gaining momentum, which will mean less production and further rise in prices due to the breakdown of the supply-demand balance.

He pointed out that the Indian corporate sector has already started investing abroad as seen from the outflow of $44 billion from India as against $27 billion inflow.

He pointed out that this is the 12th debate on the price rise but nothing happened.

The House is not a talking shop like a school debate, but an instrument to pressurise the government to enforce it suggestions, he said, while regretting that it did not take cognizance of the recommendation two years ago in December 2009 from a parliamentary panel headed by BJP veteran Murli Manohar Joshi calling for a compressive food pricing and management policy.

The BJP leader asserted that the systemic flaws in the government policies would not vanish by changing slogans, be it 'Garibi Hatao', growth with social justice and now the inclusive growth.

He cited the government's own Economic Survey that says the lowest 20 per cent population spends 67 per cent on food.

They are not able to buy anything from an inflationary market and "You can't tell them to eat 8 per cent growth," he said.

He pointed out how the government is taxing the poor through fiscal deficit that shot up from Rs 1.27 lakh crore in 2007-08 to Rs 3.37 lakh crore in 2008-09 and Rs 4.18 lakh crore in 2009-10.

The inflation kept rising as the money pumped into the economy in this manner and that too by way of revenue expenditure that does not result in capital investment.

The funds invested in the economy went into the pockets of profiteers, hoarders, corrupt and black money generators, Sinha argued.

Salman Khurshid countered his criticism of the fiscal deficit, asserting that unemployment would have increased if the fiscal deficit were put in check and the unemployed would not have money to face price rise.

Salman Khurshid pointed out that the government provided the "job cushion" to those hit by inflation through the National Rural Employment Guarantee Scheme (NREGS) and many other schemes.

He also asserted that there can be no progress without growth. The government needs growth to help the poor.

He advised Sinha not to link growth with poverty.

While BJP-ruled Gujarat is seeing faster growth and increased poverty, Uttar Pradesh can be blamed for everything against growth but nobody can say poverty has gone up, Khurshid pointed out.

Reeling out statistics to show that the food inflation, wholesale price index, consumer price index and other indices are coming down, Khurshid asserted that distributing the food stocks in the government godowns is not a solution.

The government is already giving subsidised food grains to 72 per cent of the population.

Khurshid urged other political parties to stop questioning every institution and warned that others outside will start deciding policies if Parliament does not take the right decisions.

"This will not be good for our Constitution and parliamentary democracy," he said in an indirect dig at the opposition parties endorsing acts of social activists like Anna Hazare and Baba Ramdev.