It is difficult to understand why economists make laughing stocks of themselves by making periodical predictions on the timing and extent of the decline of inflation, which turn out to be wrong. Are they based on well-tested econometric models or just hunches when they were on their haunches? Even an econometric projection is a conditional one. Its realisation relies on the fulfilment of the conditions or assumptions that are rare in a dynamic world where there are day-to-day changes in the economic universe.
The promised decline recedes further and further like a mirage in a desert as the target date is reached. P Chidambaram was frank when he said no one seemed to know the cause of the current inflation. And a feeling of helplessness was expressed by the finance minister when he said there was no magic wand or Aladdin’s lamp to solve the problem. The prime minister’s advice to states to waive local taxes on commodities will only boomerang on the Centre with the former agitating for higher grants to implement his advice.
A Seshan, Mumbai
