As the figure shows, the RBI has pumped huge amounts of rupees into the economy. Money supply has been growing at rates above 20 per cent. This was bound to pull up prices. At the same time, the global prices have gone up. This has led to a big jump in inflation. This was hardly the best policy to follow in a democracy, especially in a pre-election year.

If the Congress continues with the false fight against inflation without a genuine change in its policies, then unlike the Communist Party of China, it can be thrown out of power. It may be fashionable to follow East Asia and China in high export growth. But unlike in India, the autocratic governments in these countries did not have to consider domestic political constraints as seriously as a ruling party in India needs to.

The writer is senior fellow, National Institute of Public Finance and Policy