The ‘tsunami of change’ has transformed into a ‘storm of inflation’ in just five months of the new government. Economic indicators, both at the maco-and the micro-level, are nothing to write home about. The rupee has plummeted to an all-time low against the American dollar; foreign exchange reserves are alarmingly low; exports have only marginally increased despite a massive depreciation of the rupee; bears continue to dominate the stock market due to uncertainties over the government’s economic policies and in the political arena; the central bank’s interest rate has gone up to 10%; a cut in the development outlay in the first mini-budget is feared to bring down the economic growth from 5.8% in the last fiscal year to something around 4 in the ongoing one.
Household budgets too have taken a huge hit. While power and gas tariffs have undergone big hikes, the trickle-down effect of the falling oil prices in international market has been too small. The rise in the value of dollar has its effects too: the prices of medicines have already gone up by up to 15%, and those of many other imported items are anticipated to rise. Adding to all that is the government’s anti-encroachment drive that has resulted in huge unemployment, and that too at a time of increasing hardship.
Published in The Express Tribune, January 13th, 2019.
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