Two Cheers To The Economy, However Nothing For People

India has experienced a surprisingly strong GDP growth of 7.8 percent during the first quarter of the current fiscal year. The Reserve Bank of India's FCNR (B) scheme has also collected an impressive record of $137 billion. These two macroeconomic developments have brought cheer to the economy and financial markets, leading to celebration among ruling party circles, analysts, policymakers, and financial experts on social media.

However, despite these positive indicators, there is no relief for the common citizens of the country. The real impact of these developments can be seen in the rising cost of living, with essential items such as sugar, milk, vegetables, and fruits seeing price increases. The government has blamed the diversion of sugar to ethanol production for the surge in sugar prices, but analysts argue that this is partially true, as ethanol policy has been in place for years, and this year has seen a sharper surge in prices.

The current shortage of sugar is attributed to lower domestic production, increased demand, weather damage, global supply issues, and speculation and hoarding by industry players. The government has also imported sugar for the first time in a decade to address the supply gap. While the larger challenges of imported inflation through fuel, fuel-based chemicals, and industrial inputs from the US-Iran war, and rising gold prices are yet to unfold, the current inflationary pressures put on the common citizens are likely to worsen in the coming months.