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Managing expectations

May 13, 2008
A desperate government has resorted to drastic measures to tackle inflation. Its latest salvo is the decision to ban futures trading in four commodities— potato, soya oil, chana and rubber.

P Chidambaram
P Chidambaram
This decision was taken despite the Abhijit Sen Committee observations that it could not establish a link between the futures and the spot rates.

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And privately, senior bureaucrats concede that the move will not have any impact on the ground.

A senior government official told BT: “It’s now about managing expectations and we have to be seen to be doing something to fight inflation. We don’t think the futures ban would make a difference as inflation is a global phenomenon.” For the time being then, it appears, we’ll have to live with high inflation.

Rishi Joshi

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