The Communist Party of India (Marxist) charged the United Progressive Alliance government with making a "wrong diagnosis" of the causes behind price rise and said the steps announced to control inflation would in fact stifle the high growth rate.
"The diagnosis is wrong. Inflation has not occurred because people are demanding more food. Speculation trade is the cause of the increase in the rate of food articles," CPI(M) leader Sitaram Yechury said while participating in Confederation of Indian Industry's annual session.
Yechury, who was speaking at a session on "Inclusive and Sustainable Growth and Coalition Politics", said the government, instead of protecting the country from speculation, was reducing interest rates and reducing money supply, which he claimed would not help.
"You already have a dip in manufacturing, you already have a decline in the sale of consumer durables. You are in fact setting in motion a process of a slowdown of the Indian industry by this wrong diagnosis," he said.
He further said the "wrong diagnosis" could actually stifle the high trajectory growth rate that the country has had in the last five years.
Yechury said on one hand there is a "Shining India" which is growing at a rate not seen in decades, and on the other hand a "Suffering India".
He said inclusive growth required state intervention in terms of public investment.
"Unfortunately, we missed the bus in the last three to four years, which is manifesting in the present inflationary crisis," Yechury said. Launching a counter-attack on the Left, Union Minister Kapil Sibal said, "There are hoarders everywhere in the world... That is why there is hoarding in West Bengal and inflation is going up in the state. The West Bengal government should take care of that."
Countering Yechury's charges, Sibal said the reports of the United Nations, the World Bank and the Food and Agriculture Organisation have all spoken of the massive drought in Australia, which is known as the granary of the world.
He also said an expert committee has said that there is no evidence to show that forward trading has led to rise in prices.
"We have already banned forward trading in some items," Sibal said.
Participating in the debate, Bharatiya Janata Party leader Arun Shourie said rise in international food prices could not be put forth as an argument to justify price rise here.
"How much of our food do we import? In the case of oil, it's ok to say international prices have gone up and hence it is costlier. But not half a per cent of food is being imported," Shourie said.
He said the government was guilty of mismanagement on the issue of speculation trade.
"By October last year, the trend had started and government stocks had dropped below the norms. This was a signal to the speculators and the government did not manage the situation well," Shourie said. PTI SOM
