Budget Watch: Sop Alert

Tens of thousands of people gathered in the Indian capital on Wednesday to protest against inflation, complaining that rising prices were increasing hardship for the country's many poor, AFP reports. 

The rally was organised by the Centre of Indian Trade Unions (CITU), which joined forces with other unions to pressure the government over inflation before the unveiling of a new annual budget on Monday.

Interestingly, the news received more attention from the foreign press than it did locally, which treated the rally as another ho hum protest against gross inequalities — dull because it is unlikely to generate any impact. The Hindustan Times company's business paper Mint — which enjoys a partnership with the Wall Street Journal — opted to run a colorful pickup from Reuters that ran, "In a sea of red flags and hats bearing their union name, protesters chanted slogans and carried banners calling on the government to provide food security."

Essentially, not much has changed since my article of January 7, which argued that India may face a wage-price spiral as welfare payoffs to ease the pain of the poor and reduce inequalities actually stimulate demand and cause further spikes in prices. 

But the worrying aspect for Prime Minister Manmohan Singh and the Congress Party was the allegedly huge number of Congress protesters, as Reuters quoted a secretary of the Congress’ trade union as saying that around 100,000 people from his party alone would be joining the protest — essentially taking to the streets against their own party's leadership.