Such joy, all because of onions.

Wholesale Price Index fell to 6.16% in December from 7.52% in November. The Sensex jumped up by 1.22% or 256.61 points. Couple of days back the Sensex zoomed 375 points or 1.8% because the Consumer Price Index came in at 9.87% in December from 11.16% in November. Both the indices have fallen because onion prices had fallen from its highs. Onion prices increased by 190% in November compared to 2013 and but was higher by 39.56% in December compared to the previous year, showing a fall in the price. So, our stock market has risen by 625 points on the back of a fall in onion prices. This is no laughing matter because the market capitalization of a company depends on the price of its shares, based on which it can raise further financing or loans from banks. The market capitalization of the 30 companies that make up the Sensex would have increased by hundreds of billions of rupees. All for the price of one vegetable. Does this make the Indian economy a joke? Even though markets are rejoicing at the fall in the indices the rate of inflation is still inexplicably high because consumer demand has collapsed as shown by the Index of Industrial Production which fell by 2.1% in November. If demand is low surely prices should come down equally but that is not happening as shown by the Core Inflation, which excludes fruits, vegetables, milk and edible oils, from 2.66% in November to 2.8% in December. The reason is excessive government spending, not on productive investments such as infrastructure, but on unproductive social schemes. This is money handed out to buy votes in elections and, apart from increasing fiscal deficit and inflation, does not add to public assets. To balance its books the Congress is raiding public sector companies. Coal India is being forced to pay a special dividend of Rs 29 per share which gives Rs 164.85 billion to the government but also Rs 10.01 billion to Foreign Institutional Investors. This is our money which should have been invested in boosting coal production so that we do not waste hundreds of billions of dollars buying coal form other countries for our power plants. So many Mir Jafars. The Congress is also raiding public sector banks although our banks will need capital infusion to guard against bad loans. Perhaps the Congress wants to burden the next government because it knows it is going to lose. Diabolical isn't it?