Grocery/Vegetable shopping was never this dreadful for me, when I visit markets or the food malls to purchase the weekly Ration and stock up my refrigerator with Fresh vegetables. Just the thought of 38 Rs/Kg Tomatoes or green peas at 140 Rs/Kg, a teeny weeny bunch of coriander leaves getting dearer with the price tag of Rs 16, while the substandard quality Methi that will leave me poorer by 20 Rs, gives me nightmares. The least said about the onions and potatoes, the better.
The horrible shooting up of prices of necessary commodities is alarming, with the Cooking gas( LPG) getting costlier , and so are the pulses, the legumes, the condiments, spices, fruits, and above all the local transport fares, everything becoming dearer and dearer. According to the figures provided by NetIndian , the prices of pulses were up by 34.14 per cent from a year ago, milk by 21.12 per cent, fruits by 13.55 per cent, rice by 6.45 per cent, cereals by 5.11 per cent, wheat by 4.21 per cent and vegetables by 4.32 per cent.How is a common man supposed to survive ?
I am sure, like me, you too must have heard or read what all the politicians, the wholesalers, the vendors, the mall owners etc. are ranting about the system, each alleging the other person for being responsible for the unreasonable hike.
Now since I am not good at understanding economics , can anyone please explain me the reasons given by those in power, regarding the unreasonable hikes?
1: Short supply and increased demand…
The population do play a significant role in disrupting the balance of demand and supply, no doubts about that, but can someone explain me what are hundreds of sacks of sugar , wheat etc are doing in dock or warehouses of India, if there is such a shortage of these commodities in market? Who is responsible for the black marketing of these ? Is the supply really short or is it being artificially inoculated by people having vested interests ?
2: Fuel price hike in world markets: Now I can understand the global hike in petrol and diesel rates impacts the economy of India too. But can somebody explain me why is petrol and diesel used in fleet vehicles or the goods trucks? Why isn’t CNG used instead, its half the price of gasoline, it is more environment friendly and is commonly used in developed countries like US, for the fleet vehicles or transport trucks. Secondly not all the transportation of vegetables and fruits occurs via petrol and diesel driven trucks. There are carts used, CNG driven tempos and autorikshaws are used too. So isn’t quoting petrol rates hikes in global market the reason for inflation, sound bit illogical? I may be wrong, so kindly correct me !
3: Bad Monsoon last year: Since India’s economy highly depends upon the agriculture, which in turn is at mercy of Monsoon, this reason might sound convincing. But wait a minute, read what India Reels have to say :
Government announced a drought in India which is assumed naturally to be the main reason behind the price rise. The facts, however, say otherwise. The possibility of a drought became apparent barely in late July 2009 and its effects – a below average crop of paddy, pulses, potatoes (Kharif crop) and sugar – would only begin to be felt with lower arrivals in the market from October onwards. Last year’s drought could account for the price rise over the last two months; prices however have been on the rise since the beginning of 2008.
4: Surge in purchasing( And Spending ) power of Middle and upper Middle class sector:
I guess this could be one of the most debatable but sadly, a valid reason behind the inflation. Previously a common middle class lady, would hold herself back to pick up over priced vegetables, and would think of substitutes. For eg. if tomatoes got dearer, she would avoid stocking it in regular quantities and would rather opt for lemons or Tamarind to bring the tangy-ness in her meals. In past, if Moong dal prices would go up, the family used to rely on other Pulses. Now its just the opposite. If sugar price is up, we stock more sugar , dreading its disappearance from market.Though nowadays almost everything cost a bomb, its hard to shun everything from the pantry but stocking pulses, vegetable oil , and other comparatively slowly perishable things like potatoes and onions is causing a ripple effect. But does anyone agrees to the funda, that if consumers stop buying food commodities like sugar, dal, pulses that are overly priced, it could send a clear message to those hoarders in wholesale market , who stock these in huge amounts just to trigger inflation. What about a mass boycott of these essential commodities for few days? Would it help to combat the price hike or would it make matters more worse for genuine farmers and retailers?
Can’t there be more Farmers market , where the locally grown crops are sold by farmers directly, with no intervention of politicians and middle man.
The government could least allot places for farmers market, or better still, cant housing societies organize such temporary markets where the local farmers can sell off their crops in societies.
Regarding spending powers, here is one incident that happened last week that will prove my point.
After the News channels bombarded us with Petrol and diesel hikes , and the hikes in Rikshaw fares, I expected a daily tussle with those ummm..not so modest Rikshaw wallahs. So while I waited for a Rick outside my home, I saw one approaching , and a lady got down from the rick. As she and the rick wallah were working upon the amount of money as per meter, I was shocked to see the lady willingly paying more than actual rates. Assuming myself as a good citizen I pointed out that to lady, and she gave me one darn look but said politely ” Oh Dear, I sympathize with poor people its just matter of few rupees, and if affluent people wont help these poor, who else will? Besides didn’t you read the newspaper that states Petrol and diesel prices have surged.
I felt this strong urge to shoot back at her with ” Oh Dear, I sympathize with your hardworking husband and if educated people like you wont understand the core problem who else will? Besides didn’t you checked the label on Rick, that reads CNG ? It was not running on Petrol or diesel !
But I stopped myself from uttering single word..sigh !
5: Growing Fetish of Indians for Imported food
Why can’t government concentrate on improving quality of fruits grown in India rather than importing those genetically tampered fruits or vegetables.Does transporting Apples from Kashmir cost more than importing from Chile or Washington ?By the way are you aware that those bright red looking Apples that you happily purchase at 140 Rs/Kg are actually more than 5-12 months old? Yeah as many of you might be knowing that these fruits are coated with shellac and carnauba wax for that extra sheen and to protect them from getting spoiled , and this wax coating could be got rid only after scrubbing the apples with soap and water..now who does that to fruits?
Does oranges imported from US requires less fuel than when transported from Nagpur or Nasik? Why is there more demand of Golden bananas than local Elaichi variety? Why do we seek seedless dates from abroad if you can grow these in arid climatic conditions of Northwest Rajasthan. Why do we generate demands for imported goods, when we know that majority of those are not organically grown and have highly tampered genes. Our purchasing power have shifted the demand from locally grown products towards the imported ones. Since goods anywhere outside India are costlier than India(If sources are to be believed , In India, there is anywhere from 8- 50 % of custom duty on the fresh fruits and vegetables from abroad), so it doesnt require a great Mathematician to calculate that how could this “Imported Food” fad could be harmful for our home budgets. Yet we generate huge demand, and then cry foul about inflation.
6. Liquidity shortage ( As pointed out by Deputy Chairman of Planning Commission Montek Singh Ahulwalia(Source:Hindu.com)
The system was facing liquidity shortage owing to the more than Rs. 67,000-crore outgo for payment of the fees for 3G spectrum, and another Rs. 38,000 crore towards the spectrum fees for broadband wireless spectrum. Besides, corporates were paying advance taxes for the first quarter this fiscal.
Is going for 3G spectrum more necessary than to imply corrective measures to DEFLATE inflation ? Since the government blamed lack of ample Monsoon last year for the shortage, wasn’t it more practical to ban export of such commodities or upgrade methods of agriculture in India to harvest more goods ? Is having a world class wireless spectrum more important than curbing inflation?
7.Corruption: Well you go anywhere in the world, in any official or commercial department, you are bound to bump into at least some corrupt people. The way people in power are getting rich in current scenario, makes me ponder why isn’t inflation pinching their pockets?
I seek explanations for many more things like that, but I guess I have to stop myself at one point or other, since its hard for a naive person like me to understand the nitty gritty of economics, inflation, market talks, GDP, global influence and commodity markets, fiscal policies etc.
I just want to know one thing……Are there any solutions?