Prices of goods have been on a constant rise over past few years. A cursory look at the socio-economic scenario: inflation on a long lease; prices on the run for different consumer articles, purchasing power of money on down-hill slide, a widening budget deficit, strangely enough, consumerism on an ecstatic ascent; foreign exchange reserves at their lowest ebb; strikes and bandhs taking place on every conceivable pretext; and law and order in limbo – the list of ailments could be multiplied to any extent. Ironically enough we are so lost in ‘non-issues’ and overwhelmed by rhetoric and polemics that the malaise around and the malady within have become inescapable and irreversible resultants, the remedy of which seems to lie in the dictum ‘let nature take care of these problems’.
A hard as well as a harsh fact about which there are no two opinions is that the prices of branded consumer products have maintained a steady upward trend regardless of other events taking place in the economy. There has been a steady, upward trend in the prices of major branded consumer food products and toiletries. Barring a few exceptions, the rate of inflation in prices of common articles of consumption’s has kept pace with, or even outstripped the rate of increase in the general price index.
In some areas like milk products and cooking oil, there have been spectacular increases within a span of few months, which have had a considerable impact on consumer behaviour. Prices, which had always been a major factor in influencing consumer-purchase decision, have suddenly assumed critical importance. There is usually a seasonal decline in prices after September because of the arrival of Kharif crop but 1990 has been a special case. Despite a third bumper monsoon in a row, prices have been rising instead of falling since September 1990.
Ordinarily, prices obey the dictates of ‘demand and supply phenomenon’ at a given point of time. But with the explosion of population right at our threshold any talk of curbing or controlling the demand for essentials of life, is like putting the cart before the horse or casting pearls before a swine. Policy makers and planners are fully aware of the catastrophe that an uncontrolled population can cause to the system, however efficient and elegant it may. Mere platitudes and persuasions to put under check this monster have failed to yield results and no amount of mean incentives is going to abate the gravity of situation that stares us in the face.
Besides, the people of the country, as a whole, should be educated and instructed that there are no short cuts to prosperity, although some unscrupulous and unprincipled goons may have acquired wealth and other possessions through dubious means. Nor is the policy of populism an answer to our ever-growing problems. We have seen that under one dispensation ‘loan melas’ are arranged and money distributed for considerations other than economic and equity; under another dispensation loans worth thousands of crores are waived off and thus circulation of unproductive money and budgetary deficits, both of Centre and States, are pushed further in the name of ‘social justice’ ‘egalitarianism’ et al.
Over the years, generation of black-money and the role of ‘parallel economy’ have played havoc with the psyche of common man and thus have distorted and disfigured all talk of ‘socio-economic equality’ and rule of law. With bags full of ‘black-money’ and ‘five-star’ culture the current coin, conspicuous living and open display of ‘money-power’ are but the natural consequences of these distortions.
One can count many other factors that have contributed to the perennial, painful and poignant pressure of prices on a common man’s life, for whom to himself and to his family are becoming an unending nightmare. The cult of consumerism, however fragile, is encompassing more and more votaries in its fold.
A number of factors seem to have propelled a boom in the sale of consumer goods in rural markets. The Green Revolution, along with White Revolution; remittances from abroad of Indians in the Gulf countries; improved literacy and education etc, are creating demands, for goods, the fall-out of which is inevitable on the entire infra-structure of essential and non-essential articles of mass consumption.
Many a time artificial scarcities are created by a quick quirk of circumstances like ‘bandhs, strikes, curfew’, complete or partial break-down of transport net-work due to happenings, agitations, protests in areas of supply of essential commodities like food-grains, edible oils, coal, petroleum products, etc. all these adverse and abnormal causes push the prices further up on the graph and it is a common experience that once the prices have enjoyed the ascent towards sky, they refuse to come down easily and voluntarily, whatever be the intensity of prayers, pleadings or persuasions of ‘powers-that-be’.
For the affluent, the erosion of money-value is the least bothering problem. Business and trading groups feel the pinch for a while and then adjust themselves to the on-going developments by managing the ‘cost and sale’ economics of their respective trades and business. Highly organized sections, whether in public or private sectors, are compensated for any loss of real wages in the form of ‘dearness allowance’, which is periodically revised without much fuss or furry. The vast unorganized man-power, whether in urban or rural areas, as also the daily wage-earners, are left to fend for themselves.
The most surprising of trends is the rise in food-grain prices despite bountiful crops. Related to this is the unreasonable rise in prices after harvesting, the major reason behind these are the now regular increases in procurement prices of food-grains announced by the government. As political stakes have become higher, Governments though most of the eighties resorted to arbitrary increases in purchase prices. While many economists do not dispute the ethics and justification of these hikes, they object to the politics behind them. A stage has now been reached where the market discounts the price rises even before they occur because of their inevitability.
The priced situation is “extremely disturbing” and the current trends indicate that the inflation rate may be a double digit. The hike in oil prices will have cascading effects on all forms of transport and the prices of primary articles carried by it. The Gulf crisis will also make it more difficult to attain the year’s saving target of 21 per cent of GDP. There is a danger of remittances from the region as a whole falling with a dampening effect on achieving the saving target. The health of the economy will depend on the thrust areas – employment and agriculture, being accompanied by fiscal stability, reversing price inflation and correcting the growing pressure on the balance of payments.
Most do not expect any let up in this trend since rising expectations have become inherent in the economic system. For any let up in the price spiral to be possible, the inherent structural deficiencies in the economy and before that, in our life style, thinking, modus operandi and approach to national problems will have to be clearly defined and tackled. Otherwise the housewife’s monthly budget shall remain under heavy pressure, notwithstanding the empty promises of the ‘package of measures’ about to dawn and herald a new eta. While the vaunted ‘Consumer boom’ in the Indian market has not yet lost steam, if the price-line continues its ceaseless climb the future might not prove to be as rosy.
– Bipasha Mukherjee.