Fever maybe a sign of serious illness.

In a human being fever for a short time is treated with an aspirin and chicken soup but when it lasts for weeks and months it is a sign of serious underlying disease, from tuberculosis to cancer. It is the same with the economy where inflation is a sign of overheating. It maybe seasonal, when it lasts for a few weeks, but when it cannot be controlled over a period of years then it signifies serious problems. Trouble is that the problems are caused by politicians and this breed never likes to take responsibility for its actions. Our most revered Finance Minister pleads his helplessness at every forum, blaming his predecessor, Mr Pranab Mukherjee for the economic mess, conveniently forgetting that he was the one who created the mess between 2004 and 2008 when he started fuel subsidies, converted a Current Account surplus into a deficit and started all those juicy social schemes which helped Congress win in 2009 but resulted in the massive fiscal deficit which is stoking the fires. This is what he said recently," Demand is being stoked by the fact that we have high fiscal deficit and that fiscal deficit was not contained for a fairly long period, I think over a period of two years." So cute, isn't he? But has he really tried to control inflation since he came back into Finance last year? He has tried every trick to pressure the Reserve Bank from raising rates. Even now he says," I have been advised that inflation has got entrenched and monetary policy does not have or has very little impact on food prices and fuel prices." What is that supposed to mean? What does he mean by " entrenched "? Does it mean that no attempt should be made to control food prices which are killing the poor? Not just that. He is actively stoking inflation by keeping interest rates low. India has the lowest real policy rate, which is the difference between interest rate and the rate of inflation. Real policy rate is positive in Brazil, Malaysia, Thailand and South Korea which means the interest rate is higher than the rate of inflation so savers get real returns on their investments. It is negative in Indonesia, South Africa, Turkey, the US and the UK, the highest being in Turkey where it is -2.80. In India the real policy rate is a whopping -3.45%. In fact the US, Europe and Japan are worried by very low rates of inflation. The only cure is to get rid of the cause.