Even as the ruling party at the Centre prepares the ground for the April-May Lok Sabha poll with the well-timed inauguration of the Ram temple, the consumer price situation may be a cause for some worry. For, the latest data shows an unseasonal spurt in the prices of vegetables, pulses and spices, all items of daily use by the rich and the poor alike. Retail inflation last December was at a four-month high of 5.7% owing to the spurt in food prices. Data released last week by the National Statistical Office (NSO) noted an increase of 27.6% in vegetable prices and nearly a 10% increase in prices of cereals. Also, nine States recorded a higher rate of consumer inflation than the national average; among them were Odisha, Gujarat and Rajasthan. Meanwhile, even on the industrial front the news was far from positive. Factory output last November at 2.4% was the slowest in last eight months. The deceleration in the growth of Index of Industrial Production (IIP) was mainly on account of the slowdown in manufacturing which grew at 1.2% in November as against 6.7% in the same month in 2022. Power generation last November slowed down to 5.8% as against 12.7% growth in November 2022. The Reserve Bank of India expects the consumer inflation to ease in the next two months. Meanwhile, ahead of the parliamentary poll, the interim budget is set to present a rather rosy picture of the economy, thanks to handsome gains recorded in tax collections. Net direct tax collection is likely to be higher by about one lakh crore than the Budget estimates. Personal income taxes have grown by a whopping 27.3% while corporate taxes have recorded an increase of 12.4%. There has been a remarkable rise in the number of income-tax returns filed in the current assessment year. At over eight crores these were the highest ever. Ascribe the rise in IT returns to an increasing digitisation of the economy along with the extraordinary vigil by the taxmen. By end-December, 81% of the tax collection targets were met; in the remaining last quarter of 2023-24 the government expects to fulfil its full-year target. Even on the important question of fiscal deficit, the government can hope to meet the budgeted target of 5.9%. In sum, ahead of the general election, Finance Minister Nirmala Sitharaman will be able to justifiably paint a rosy picture of the country’s state of finances. Between now and April - May when the election is due the consumer prices too would have moderated within RBI’s comfort levels. With mega infrastructure projects, such as the 22-km Mumbai Trans Harbour Link from Mumbai to Navi Mumbai which the Prime Minister inaugurated last week, the consecration of the Ram temple scheduled for January 22nd, and the economy on the whole on the growth track, the ruling party seems well prepared to take the challenge of the sputtering INDI alliance head-on.
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