Panch Tattva Wisdom

There should not be excessive panic if prices are merely reflecting the actual economic reality of the time. In fact, suppressed prices often create bigger distortions later. If crude oil becomes expensive globally, then fuel, transport, fertilizers, logistics and eventually many goods becoming costlier is a natural transmission mechanism of the economy. Trying to permanently deny this reality through artificial controls can create fiscal stress, shortages, misallocation and delayed inflation shocks.
The more important question is not whether prices rise at all, but whether the economy and society are becoming capable of absorbing those price changes without major damage to welfare.
For example:
If incomes rise faster than energy expenditure, then even higher crude prices may not hurt households severely.
If industries become energy efficient, then inflationary transmission weakens.
If public transport, electrification and domestic energy production improve, then imported crude matters less.
If interest rates and fiscal policies remain disciplined, inflation expectations stay anchored.
Some inflation is also the price of growth and changing realities. A growing nation with rising wages, urbanization and consumption will naturally see upward movement in prices of land, labor, services and energy. Completely static prices in a dynamic economy are neither realistic nor always desirable.
At the same time, there is a difference between:
healthy price discovery, and
destructive inflation spirals.
Healthy price discovery reflects real scarcity, global conditions and demand. Destructive inflation happens when money supply, fiscal deficits or speculation run too far ahead of productive capacity.
In India’s case, one can argue that allowing fuel prices to broadly reflect international realities has long-term benefits:
consumers gradually become more efficient,
government finances remain healthier,
subsidies become targeted instead of universal,
and the economy develops resilience instead of dependency.
The “hue and cry” usually comes because people psychologically anchor themselves to old prices. But economies are living systems. Prices are signals. They communicate scarcity, abundance, demand and geopolitical realities. If those signals are completely muted, future adjustments often become far more painful.
A balanced view may therefore be: inflation should be controlled, but reality should not be denied.
Krishna Khandelwal