Daily Excelsior... Editorial

EDITORIAL

Chrar: Operation Devastation-I
No role by Hurriyat
Conference during
Chrar crisis

From B L Kak
Before and after Kashmir’s ‘Abode of Bliss’, Chrar-e-Sharief, was destroyed along with...more

Cathay pacific to fly
non-stop to Delhi

By D K Arora
There is finally some good news for those travelling to Hong-Kong. Cathay Pacific has announced the commencement of four non-stop flights a week ......more

Statesman in India

By Mohinder Singh Jamwal
In the early part of this Century, when most countries in Asia and Africa were reeling under colonial rule, the turbulent times ......more

The Devil of inflation

By S.V. Vaidyanathan
During Jawaharlal Nehru's time, the opinions of economists, specially in universities,........more

EDITORIAL

INTERNAL SECURITY

It is quite a disturbing situation when belted men are engaged in fireworks with MPs and their gangsters. Though Bihar is notorious for private armies, in the instant case the RJD MP Shahbuddin alongwith his aides gives thrashing to DySP near examination hall. It infuriates cops as they don't like it happening. They are meant to enforce law. If someone howsoever mighty manhandles and injures the DSP seriously, the cops cannot be faulted for coming on the streets. They were in no mood to tolerate such humiliation at the hands of someone who maintains a gang, who is a history sheeter and who enjoys tremendous political clout. It was precisely in the backdrop of virtual revolt amongst the cops that warrant of arrest was issued against Shahabuddin. When the cops went to arrest him, his armed supporters used all types of fire power to take on the cops. The weapons thus used resulted in long encounter which shows the magnitude of ammunition stored by the MP or his supporters so much so that help had to be obtained from other places to control the situation. Such storage of weapons cannot occur suddenly. It must have been in the making for a number months or even years. Again, many fatalities occurred including two cops. On top of it the MP swears that he won't rest unless the concerned SP is eliminated. The result is that MP escapes. Warrants are not executed. Much worse is the political overtones being given to strictly criminal activity in which the MP engaged personally. Instead of facilitating arrest of the MP politicians are busy to corner the police for use of 'brute force'. Yes, this explain the abysmal depths to which parties for petty political expediency have sunk. For all one knows, MP is going to be provided escape route by the powers that be. The police will be cornered. And none should be surprised if the threat of elimination given by the MP to the SP of Siwan becomes real. Bihar Military police is called. Rapid Action Force is there. Regular Army columns also requisitioned to control the situation. To that extent it is not mere law and order problem but has much bigger and sinister connotations.

In the neighbouring State of Uttar Pradesh the situation in Kanpur reflects that sophisticated weapons are galore. They have been used by the rioters against the police and other security personnel sent there to control the situation. Grenades have been thrown on the police station and exchange of fire in many localities continues unabated. A lot of damage has been done to private and public property. The situation is fast spreading to other localities. Here also Rapid Action Force and Army help is requisitioned besides the CRPF and State police. As on date over 20 fatalities have already occurred. Police in their search operations have recovered huge stash of country-made bombs, weapons and explosive material. Deputy Commissioner is replaced. So is the SSP.

Although law and order is a State subject but deteriorations in internal security environs naturally involved the Centre, more so when Central forces are summoned to control the situation, including army. This is something very serious. Such large stockpiles of weapons in just two places i.e. Pratappur and Kanpur. One shudders to think of similar citadels in other centres not only in these two States but other States as well. Kashmir is disturbed. So are the north-eastern States. There insurgency is sustained and propped up foreign countries. But what happens in Kanpur and Siwan is quite thought provoking. At this stage one is tempted to surmise that ISI has indeed spread its tentacles far and wide particularly in communally sensitive and vulnerable areas of the country. It is a direct challenge to our secular credentials. No sane Government can allow any latitude to such forces of mayhem and anarchy being funded from abroad. Where is country's intelligence set up? Why they could not smell such arm-dumps, get at gangsters and those affording them political protection. A couple of years back Home Minister Advani claimed having smashed many ISI modules. The promised White Paper on ISI activities has not seen light of the day. The happenings in Pratappur (Siwan) and Kanpur call for very stern action against those who possess illegal weapons, receive finances from foreign sources to spread anarchy, communalise the environs and identify those who back themup for petty gains in the political apparatus. If not checked right now and the evil allowed to persist, such nefarious acts would continue to affect this or that part of the country.

GROPING IN DARK

As per the reports from AICC session in Bangalore, it is evident that Congress Party continues to beat about the bush. It stands manifested from total turnabout of its agenda. Hardly the ink dries on the brain storming and much-hyped Panchmarhi session decisions, there are somersaults galore in the Bangalore session decisions. First, the party is ready to join hands with all and sundry to dislodge NDA Government. All and sundry means whether they are corrupt, history sheeters or otherwise enemies, it is war on BJP led Central Government. It does not mind highly corrupted company of Jayalalitha's bandwagon. It shares power with the scam tainted RJD in Bihar. It will go with the 'Peoples Front', the parties that prevented Sonia from becoming PM when NDA Government was voted out. These are the parties who did not allow Congress to share power in the United Front Government which survived on Congress crutches. Now it sacrifices all its principles and is ready to share power and become part of the coalition culture. Such combination of motley groups where all are prospective PMs could be much worse than the incumbent NDA amalgam. Second, Congress is not ready to face another election in the event of Vajpayee Government falling. The proposal is to dislodge it by means fair or foul and then go about Government formation. A totally disorderly orderly. Third, it does not wish to face the House or dislodge the NDA Government democratically by voting it out. It decides not to allow the Parliament function and compel the Vajpayee Government to resign. Such is the faith of the Congress Party in the Constitution, in the democracy and in Parliament. So it advocates openly the policy of doing things outside the Parliament where many important legislative measures await, including the budget. It reiterates that it won't allow parliament to function even when it reassembles on April 16 after three weeks recess. Congress conveniently forgets that President did not allow imposition of his rule in Bihar and Rabri Government was re-installed after a month's gap. President had insisted that the correct forum to throw away the Government is the assembly. As long as Rabri Government has majority, it means it continues to enjoy confidence of the people and the assembly. Incidentally, Congress shares power with this Government in Bihar. Congress is reminded that it did not dismiss Maharashtra Government of Naik and Pawar in the wake of mass communal riots and chain blasts in 1992-1993. How then it seeks removal of NDA Government through street methods outside the Parliament. Lastly, it does total turn-about of its policy on liberalisation when it advocates strengthening of PSU, PDS, subsidies for farm sectors to that nation is made to lose what it gained during the decade since 1991. These changes policies are the same as prescribed by Communist Parties (the leftist bandwagon). The outcome of such somersaults is that Congress becomes a party to destabilisation of the country. One wonders what it can be possible gain from such 'drastical changes' All one knows others would eat up whatever is left of the Congress if it fails to draw and the right lessons for its earlier hob-nobs with UF which resulted in further attenuation of the party.

Chrar: Operation Devastation-I
No role by Hurriyat Conference during Chrar crisis

From B L Kak

Before and after Kashmir’s ‘Abode of Bliss’, Chrar-e-Sharief, was destroyed along with the tomb of the patron saint, Sheikh Noor-ud-Din, popularly known as ‘Nund Reshi’, in May 1995, the All-Party Hurriyat Conference (APHC) managed a wide coverage for its existence and operations as the ‘sole representative body’ of the people of Kashmir. If the conglomerate of various secessionist and political groups had really meant what its leadership said more often than not, then the verdict in the just-released document would have been different altogether.

The document in the shape of a book has pronounced that the All-Party Hurriyat Conference played no role during the crisis which engulfed Chrar-e-Sharief before and after its devastation in a big fire. According to the book titled ‘Military Operation in Kashmir: Insurgency at Chrar-e-Sharief’ , the Hurriyat leaders only chose to distribute largesse among the displaced inhabitants of Chrar at various refugee camps.

A member of the APHC-his identity has not been disclosed by the authors of the book, GN Gauhar and Shahwar Gowhar-had said in village Sogam that the "town and tomb will b e constructed but its flames will burn palaces of oppression and from its ashes our freedom will raise its head".

Gauhar and Gowhar, in their 407-page book, have noted that the dominant intention in these outbursts and the statements of Indian military officers and BSF commandants was the same. One military officer, to quote Gauhar and Gowhar, said at ‘Zinpaanchaal’ to one Showkat Hussain Waza: "The town and tomb will be reconstructed, don’t worry". The other said that a monument like Taj Mahal would be constructed at the grave of ‘Baba Jee’.

Regretting that no military or BSF officer said how the burning of the town and shrine would serve India, Gauhar and Gowhar placed on record: "From these statements of common themes it is evidently inferable that the Indian forces had planned this destruction and the APHC leadership aspired to create a deep-rooted agitation out of this destruction".

The book, which has been published by New Delhi’s Manas Publications, says: "If we go into the history of turmoil in Kashmir, we will find, like all other places in the world, some hidden hands somewhere either initiate the process of such uprising or patronise it". No wonder, the flow of questions, one after another, from Gauhar and Gowhar. Who brought Mr Abdul Qadeer in 1931, a non-resident of J&K, and a waiter with some Englishman? Who made Sheikh Abdullah change horses mid-stream and defect from the All J&K Muslim Conference and establish the J&K National Conference?

Who tied the Sheikh’s matrimonial career in the delicacy of British superiority? The book, while recalling that the Working Committee of the National Conference, on May 19, 1946, unanimously rejected the idea of ‘quit Kashmir’, asked: Who made the Sheikh defy the consensus the next day and burn Kashmir? Yet another question: Who made Sheikh Abdullah change his stance in 1953 so abruptly that Kashmir had no leadership to channelise its anger towards a result-oriented direction?

And one more question from Gauhar and Gowhar: Who incurred expenses for the defence of Sheikh Abdullah and Mirza Mohammed Afzal Beg during the Kashmir conspiracy case? All these questions, the book says, can lead one to one answer-that is, after every important in J&K, "there has been some hidden hand actively working". Gauhar and Gowhar have added: "So, if a hidden hand in New Delhi was able to convey threat, there must have been similar influences from Muzaffarabad, Islamabad, Rawalpindi or Lahore working at the same time. But why didn’t that hidden hand act? It is a mystery".

Referring to the presence and role of Pakistan-aided ultra, Mast Gul, in Chrar township before and during the devastation of the famous shrine, the book says that every intelligent section of Chrar population had assessed that Mast Gul was guided from somewhere else. "He was not under the persuasive influence of the APHC", is the verdict from Gauhar and Gowhar.

In this case, the word ‘verdict’ has been used in view of the fact that while GN Gauhar is former District and Sessions Judge, Shahwar Gowhar is an advocate in Delhi High Court. On the basis of their hard labour and well-planned research exercise, Gauhar and Gowhar have drawn the conclusion that there was a "definite purpose, with one side wanting to derive capital out of the destruction of Chrar".

"But again some ‘super’ influences effectively persuaded upon Pakistan not to press through the APHC the exploitation of this explosive situation", Gauhar and Gowhar say and assert: "In no case can we believe that the leadership of the APHC could only be cowed down by threats from New Delhi. Probably there was no green signal from the other side too (an obvious reference to Pakistan)".

On the APHC’s role, the book says: "It seems that either the leadership of the APHC was overawed by the arrogance of Maj. Mast Gul or were led into inaction by the halo which Mast Gul had acquired along the youth of the towns or, a common godfather had guided them to lie over". That Gauhar and Gowhar could not satisfy themselves with the performance of the APHC leaders can be explained by their criticism, though woven in diplomatic language: "In each and every situation, they could at least convince the quarters not to project Mast Gul or any guest militant as a spokesman before the media".

If the book is any guide, the Hurriyat leaders’ failure was on two other fronts as well. They failed to prevail on the militants to leave through safe routes as the "destructive mood of the Indian forces became visible after March 8, 1995". Secondly, the Hurriyat leader did not try to manage the safe removal of the relics from the Chrar-e-Sharief shrine complex. "There was complete inaction demonstration by this agglomeration (APHC)", the book has asserted.

(To be continued)

Cathay pacific to fly non-stop to Delhi

By D K Arora

There is finally some good news for those travelling to Hong-Kong. Cathay Pacific has announced the commencement of four non-stop flights a week between Hong Kong and Delhi from March 26. Air-India also plans to operate additional direct flights between Mumbai and Hong Kong. This would lead to an increase in capacity coinciding with the Indian summer rush. This is a welcome relief for passenger as this sector is short of capacity and it is near impossible to get a confirmed ticket even during the lean season.

According to Jason Philip, marketing and sales manager (India). ''This addition in capacity was long overdue and it will reduce the pressure on flights originating out of Mumbai. Bookings are already open and we are optimistic about this market.'' The flights would arrive from Hong Kong on Monday, Tuesday, Friday and Saturday and would depart from Delhi at 3.20 am on Tuesday, Wednesday, Saturday and Sunday.

He said Delhi was an important addition to Cathay Pacific's passenger network and would help further strengthen Hong Kong's place as Asia's leading aviation centre. Cathay Pacific made the decision to operate to Delhi just days after the conclusion of an air traffic rights agreement between Hong Kong and India on January 19, when the two Governments agreed to allow extra seat capacity on the route. Cathay Pacific had been interested in flying to Delhi for many years. Deputy Chairman and Chief Executive David Turnbull said: ''We are delighted our long-cherished plans to fly between Hong Kong and Delhi can now become a reality. We believe there is tremendous demand on this route and we are confident this will become one of the most popular services in our network.''

Delhi would be Cathay's second passenger destination in India. The airline, which began flying to India's commercial capital Mumbai in 1982, currently operates four flights a week on that route. In September last year Cathay Pacific began operating freighter aircraft to Delhi.

Cathay officials find Delhi as one of the world's most fascinating cities. Its attractions include shirnes, monuments, fortresses. colourful bazaars, tree-lined avenues and excellent food. As the travel hub of northern India, it is also an excellent base for exploring India's leading tourist destinations such as Agra and its Taj Mahal.

The route should also prove popular with business travellers given the increasing business ties between India, Hong Kong and China. This new development comes at a time when the Hong Kong Tourist Authority is promoting its destination as a major market for the Indian outbound. A positive outcome of additional flights on this sector would be a probable reduction in the airfare. The approximate flight time from Delhi to Hong Kong would be five hours and 30 minutes. Cathay has decided to operate A 330-300s on this route, which have 44 Business Class and 267 Economy Class seats, which make a total of 1,244 seats per week.

Air-India has also decided to increase its capacity to Hong Kong, ex-Mumbai. According to a spokesman of the airline, ''We hope to induct our leased aircraft by April and May this year and will increase our capacity on the Mumbai-Hong Kong sector.''

Cathay Pacific Airways also offers the world'' first comprehensive Online Check-in service, allowing passengers to check in for flights via the Internet, before heading for the airport. The new service alows passengers to save valuiable minutes before departure and gives them the added confidence of knowing their confirmed seat number up to 48 hurs before departure.

Passengers can request for window or aisle seats, just as they would at the airport. They can check-in anywhere they have a connection to the Internet from home or office or even Internet-cafe. Boarding passes are collectable on arrival from dedicated counters at the Hong Kong International Airport and at most of Cathay Pacific's International destinations. The services is initially available for all Asia Miles and Marco Polo Club members and their travelling companions.

As an added bonus, passengers who check in ofr flights before 15 March via the website-www.cathaypacific. com- will receive an extra 1,000 Asia Miles.

Although some airlines are already offering limited check-in services, Cathay Pacific is the world's first airline to offer the general public an online check-in service on almost all-outbound and inbound international routes. The airline has opened dedicated boarding pass collection counters at all but 10 of its destinations.

The Online Check-inservice can be used up to 90 minutes before flight departure, and boarding passes must be collected at least 60 minutes before departure. Passengers can also check-in lugguage when collecting the boarding pass. Online Check-In is just part of the suite of new service that helps make Cathay Pacific Asia's leading e-business airline. One of the travel tools, notiFly Flights Paging, allows passenger to enter flight details via the website and get a reminder via Email. It allows mobile phone subscribers in Hong Kong and Taiwan to have latest Cathay Pacific flights information sent directly to their phones. The text messages work on mobile phones even without WAP capability.

World's Best Airline Website Award : Cathay Pacific Airways has bagged the prize for Best Airline Web Site 2001 in a worldwide survey of frequent flyers by OAG, a manjor provider of independent business travl information products.

Announcing the awards the host, British television presenter Steve Rider, observed; ''Innovation is abounding as airlines exploit the potential of the Internet to find new ways to foster customer loyalty, through one-to-one marketing and tracking customer behaviour.'
-CNF

Statesman in India

By Mohinder Singh Jamwal

In the early part of this Century, when most countries in Asia and Africa were reeling under colonial rule, the turbulent times threw up a galaxy of statement across the world, who were the most exquisite examples of courage and conviction. They were the giants who bore the brunt of freedom struggles against their "Colonial masters" and placed service above self. Alas! their race seems to have almost come to an end and in their place, the world, is being disfigured by the deluge of politicians. Our political leaders are men of clay and are parochial in their prudence. They hardly fit into the shoes of those great souls that strode the scene of this world, when the going was tough and rough, and the fight between the ruler and the ruled was unequal and uncertain.

No doubt, power, politics and politicians form the triangle, each angle of which is equally important and indispensible to the other. With the blind pursuit of power becoming a possessive passion with the politicians, the rules of the game of governance are changing in order to suit the fads and fancies of our present day rulers. In a country like India, people get the government, they deserve. With a few variations in tone and temper, political activists prefer to resort to expendiency much against the spirit and faith of the statesmen in exellence. As a rule a politician lives in the present and tries to twist every event to his advantage with scruples kept under wraps and conscience made to dance to his tunes. A successful political man is adept in the art of changing colours, like a chameleon. It hardly matters to the common man if some of the politicians caught in the mire of scandals and scams of different hues take an ignominous departure from the political stage. In their place a plethora of other breed of politicians, who have been waiting in the wings make a sudden appearance on the centre stage of political activity.

Among them their goes a mad race to outwit others of their ilk and grab power by hook or by crook. With political standards and norms touching a new low every now and then the political culture is taking a nose-dive. It is not surprising that people have started looking upon themselves with disgust and disdain. Those stupendous in concept and concern are statesmen but those pygmies of precepts and practices are politicians. The former seldom appear on the spectrum of hurly-burly life whilst the latter erupt from under every brick. A statement rare in species are mindful of the means they adopt to reach the end but politicians like impatient power-brokers, take to the shortcuts to be the first to pass the post. Politicians are a class meant to confuse and compound the issues at stake and thus demean the law making institutions like parliament and state legislature. The all round deterioration in political parameters is too obvious to be ignored.

A political activist fail to see beyond their nose and therefore make a momentry mark on the shifting sands of time, it is the statesman who chisel and chasten the contours of politics. He is worried about next generation. On the other side a political person is concerned about next elections. Policies and programmes of their times to render them relevant and reverential in future too. They are not given a making pompous and tall promises or taking people for a ride. Though too few in number a statesman always carve a noticeable niche for themselves in the hearts and minds of people and liberate them from the hallow halo of empty hopes and illusions.

Behind every skeleton, scandal, and scam the hands of the politicians, though hidden are very much there. If the statesman, is a man of few words a politician is a demagogue, who is prolific in promises and pronouncement but pathetically poor in performance. All his moves are aimed at electoral arithmetic and short term gains arising out of the loaves and fishes of office. He always tries to increase and consolidate his vote-bank.

Politics is the last refuge of a scoundral may be true of politicians elsewhere but particularly in India it is the first priority of those who want to make a quick buck and settle scrores with their opponents. With cash, crime and corruption ruling the roost, the politicians are naturally fast multiplying. He is solely responsible to the party or organisation with which he is affiliated whereas a statesman finds himself answerable to the country.

Surely we need another Gandhi Ji, Neta Ji Bose, Lokmanya Tilak to clean the augean stables before the politics of our country becomes too sick to be cured of its ills.

The Devil of inflation

By S.V. Vaidyanathan

During Jawaharlal Nehru's time, the opinions of economists, specially in universities, were given the prominence by the Press. This was so not because there were no technical economists advising the Government but because the then political leaders felt that outside technical opinion was very important, especially in the Budget's impact on the poor. Mumbai was not merely the financial and commercial capital of India, but also the intellectual capital, especially in economic matters. The Reserve Bank of India's (RBI) views were also given the great importance by Delhi. Though the RBI was nationalised just before Independence, for some years after Independence, its views were taken seriously by the Government.

The Budget used to be presented on the evening of the last day of February. But the explanatory memorandum, which contained economic data, would be available in Mumbai on the same day, sometimes even before the Budget was presented. (The Economic Survey, thin in earlier years, started appearing from 1957-58. My impression is that the innovation of the Survey was the combined idea of the late Professor J.J. Anjaria and I.G. Patel). The Budget speech was broadcast by the All India Radio and relayed by all stations. The Finance Minister would generally come to Part-II of the speech containing the tax proposals by 6 p.m. or 6.30 p.m. We would all be waiting near the radio sets for the figure of the budgetary gap, which would be revealed by the Finance Minister at the end of Part-I of the speech. We would then know the size of the deficit in the combined revenue and capital accounts.

Part-B would contain his tax proposals and at the end of Part-B of the speech, the Finance Minister would reveal the uncovered deficit and the amount of the ad hoc treasury bills he planned to sell to the RBI. We would then work out the extent by which money supply would go up. By also estimating the approximate increase in output growth, we would estimate the probable increase in the price level. Inflation even at the rate of 1 per cent per year was considered undesirable from the angle of the middle class and the poor.

Any inflationary incidence of the Budget would be given much attention the next morning by the media. Budget deficits would be invariably linked with inflation. (However, once at least, the economist were tricked by John Mathai, who revealed that the deficit was covered by import surplus by running down exchange reserves.) Like most others, the journalists had relatively low incomes and the editorials would, without exception, be against any inflation. There was no automatic dearness allowance system and even the allowances were not fully linked with the inflation rate. As for the non-government public, there were no dearness allowance, but the factory workers would be compensated by bonuses. There were lags involved here. The effects of the Budget on the public were primarily through its effects on the price level of essential commodities.

Till the late 1970s, there were no deficits on the revenue account at all. On the other hand, there were always revenue surpluses. It was on the capital account that there would be gaps between normal receipts and expenditures. In the normal receipts, receipts through small savings and very limited market borrowings would be included. It was because of the need for the government to spend on capital formation items that some deficit would emerge on the capital account. The use of moderate deficit financing for the purposes of public capital formation was deemed justified. But such deficits had to be small and should not have caused the price level to go up beyond a small extent. In fact, controls over prices of essential commodities and the public distribution system had emerged with a view to prevent the price level from moving up immoderately due to deficit financing in the capital account. Dr. Narayan Prasad in his biography of C.D. Deshmukh records that the latter spent a sleepless night on the eve of presenting the Budget because he had to incur a small overall deficit of less than Rs. 300 crore. What a sensitivity towards the poor by a Finance Minister! We now run a fiscal deficit of tens of thousands of crores of rupees without batting an eyelid.

I have referred earlier to the importance of Mumbai, Kolkata and Chennai. Almost all the economists in these cites were against inflation. Finance ministers had to listen to them since the political leaders did not want to hurt the middle class and the poor. There was a great deal of sensitivity in Parliament about the sufferings of the poor and members were against the government adding to these sufferings. In fact, members of Parliament in those days had meagre incomes and would also be affected by inflation. Most of them used to travel in trains and train accidents would be a very serious matter.

It was after Jawaharlal Nehru's demise and in the early 1970s that the political bosses' sensitivity to inflation disappeared. Members of Parliament started protecting and preempting themselves against inflation. Indira Gandhi, during whose tenure inflation touched double digits, thought for sometime that inflation was due to world factors. Later she was persuaded that endogenous factors in India were responsible for inflation. It was to her government's credit that she took very strong measures in 1974, thanks to a unanimous memorandum by most economists, to lower inflation. For the first time in free India political leaders and media persons were convinced that powerful monetary and fiscal measures could reverse inflation, and do so in a short period. Indira Gandhi had, like her father, realised that inflation would hurt the poor.

Morarji Desai was also very sensitive to inflation. It was only from the mid and late 1980s that prime ministers and finance ministers became less sensitive to inflation. The late Y.B. Chavan, who headed a Finance Commission, was strongly against calculations in Budget forecasts building in an inflation year by year of 5 per cent or so. The concept of a tolerable inflation rate started being sanctified with the growing importance of Delhi intellectuals in budgetary matters, and Mr. V.P. Singh and others were thinking in terms of a 5 per cent inflation rate as tolerable. The so-called Leftists were reluctant to accept that inflation could be brought down through monetary measures. Their attitude to inflation was ambiguous. But it was to the credit of the late Sukhamoy Chakravarthy, a leftist intellectual economist, that he gave his considered view very strongly against inflation and argued that even if inflation helped growth, it had to be avoided on the score of equity. Dr. Manmohan Singh and Mr. C. Rangarajan were against persistent inflation though they wanted a ceiling on inflation at not above 4 per cent.

Now we have come to a stage when we think there is a distinction between inflation caused by administered price rises of essential goods and inflation caused by monetary policies. The latter inflation is termed core inflation. But unlike in other countries, where incomes have some liquidity cushion, and the rise in the prices of oil products do not imply any cut in demand for essential wage goods, in India the position is otherwise. A steep rise in the price of kerosene will have a big income effect on the poor and they will be forced to buy less food and other essential commodities. This is happening in India. A rise in the price of oil products, howsoever brought about, reduces demand for other consumer goods. Consequently, the prices of the latter either do not go up or actually come down. This is not due to the intrinsic supply abundance of the latter products, but due to the forced foregoing of demands for them. Even public distribution supplies are not bought in that measure. Thus, for the poor even a small rise in the price of kerosene and such products has a big effect. Note that the Survey this year states that the kerosene price has risen by 135 per cent between November 1999 and November 2000. On an income of Rs. 100, the above would imply a cut by Rs. 9.5 or nearly 10 per cent. Who compensates the poor and the lower middle class in India? The General Equilibrium theory tells us that a cut of 10 per cent in the incomes of the poor and the lower middle class would mean a big reduction in expenditures on other necessary consumer goods. A careless use of this term in India would show ignorance by value theory economists and also betray insensivity to the vast less fortunate human beings in this land. The RBI Governor, Dr. Bimal Jalan, has cautioned against the unguarded use of the distinction between core and headline inflation.

As in the West, it can be argued that monetary and fiscal policies are not the main cause for a steep rise in general prices when administered prices are suddenly raised. But this does not mean that the rise in prices does not hurt the poor. There is no difference on the effects of the inflation process, whether it is due to headline inflation or core inflation. Nor is it proper to exclude the impact of administered prices when looking for the real interest rates. INAV