India is not the US. Why can''t they understand that?

"Introduced as an emergency response to a severe fall in aggregate demand at the end of 2008 and the beginning of 2009, quantitative easing (QE) has since become the main policy tool of advanced-economy central banks," wrote former governor of the Bank of England Mervyn King. "But the enormous scale of purchases during 2020 and 2021, in circumstances where the case for a substantial monetary injection was far from clear, led to concerns about its impact on inflation." The Reserve Bank of India (RBI) has followed suit, buying government bonds from the market to create a shortage, push up prices and thereby reduce yields, under the alias of Government Securities Acquisition Programme or G-SAP, The Indian Express (TIE). "In order to ensure stable and orderly evolution of the yield curve amidst comfortable liquidity conditions, the Reserve Bank of India on Wednesday decided to put in place a quantitative easing program, pledging to buy up to Rs 1 lakh crore (Rs 1 trillion) of bonds in April-June quarter to keep borrowing costs low and support the economy," sify.com. "On June 4, RBI Governor Shaktikanta Das had announced that the central bank will conduct open market purchase of government securities of Rs 1.2 lakh crore under the G-SAP 2.0 in the second quarter of 2021-22 to support the market," Economic Times (ET). What about inflation? "Inflation is what we now have: 5.4% in the US and 2.5% in the UK, with more to come," warns King. In India, Consumer Price Index (CPI) was 6.26% in June, a shade lower than 6.3% in May, Business Standard. Wholesale Price Index (WPI) was 12.07% in June, again a little lower than 12.94% in May, ET. "India's wholesale price-based inflation is at a 30-year high, leading to a 'very alarming' situation for the country, former World Bank chief economist Kaushik Basu said on Thursday," ET. Though there is no danger of hyperinflation, the "inflationary situation is at a very risky bend". "I feel not enough is happening once again between the Treasury, the finance ministry and the central bank for the inflation," said Basu. But what if the troika mentioned by Basu is acting in collusion to raise inflation? "The Union government's tax collections on petrol and diesel jumped by 88 percent to Rs 3.35 lakh crore (Rs 3.35 trillion) in the year to March 31, after excise duty was raised to a record high, the Lok Sabha was informed on Monday," India Today. This is a deliberate act to raise the cost of transport of all goods, from onions to oxygen. "After the pandemic disrupted India's economy and led to increased unemployment and slashed wages, a sustained period of higher food inflation is now pushing millions of families to cut back on food expenditure, threatening a spell of nutritional poverty and malnutrition among children," said IndiaSpend in January 2021. "The government's policy of increasing taxes on fuel was a big factor behind higher inflation, said economists, which would have a negative bearing on millions of self-employed and small businesses, who, along with tens of millions of informal sector workers, have been the worst hit from the economic damage." So why do it? Because, "The economic contraction -- 3% in nominal gross domestic product (GDP) -- and 7.7 decline in revenue receipts in 2020-21 has forced the government to borrow a record amount to meet a revenue shortfall," wrote Asit Ranjan Mishra. "General government debt, combining debt of both the Centre and states, is projected to cross 90% of GDP in 2020-21 from 74.1% the year before." India's debt-to-GDP ratio is lower than many countries but rating agencies "consider the ratio to be well above India's peers in a similar rating category". "A slow, chronic inflation is the most politically palatable way of reducing the debt in a manner that is somewhat unnoticeable to the electorate," Kahler. "The public debt mountain must be whittled down. Eventually, in the second half of the decade, the inflation rate will reach a permanently high plateau, bringing down government debt ratios meaningfully, as seen in the second half of the 1970s," wrote Prof VA Nageswaran. But, what applies to Europe and the US does not apply to India. If there is a rating downgrade the rupee will fall making everything much more expensive. It may reduce government debt but it will be political suicide. What will they do to hang on to power? Martial law?